1987 (12) TMI 76 - AT - Income Tax

Summary

Issues involved: Whether payment of commission for procurement of business is deductible in computing income for assessment year 1982-83.

Summary:
The case involved a private limited company manufacturing transformers facing a steep fall in turnover, claiming a commission payment of Rs. 30,000 to procure orders from Punjab State Electricity Board. The Inspecting Asstt. Commissioner doubted the commission's purpose and verifiability, denying the deduction due to lack of evidence. The Commissioner (A) upheld this decision, emphasizing the need to prove expenditure was for business purposes. The Tribunal heard the appeal, where the assessee argued that commission payments were common in the industry and crucial for securing contracts based on quality, capacity, and adherence to schedules. New evidence presented included an appointment letter and receipt from the liaison officer, supporting the commission payment. The Departmental Representative objected to this new evidence, claiming the assessee failed to prove the necessity of the commission. However, the Tribunal allowed the evidence, stressing the importance of seeking the truth and considering all relevant evidence. The Tribunal directed the Commissioner (A) to reevaluate the deduction claim in light of the new evidence and the significant increase in orders from Punjab State Electricity Board. Ultimately, the appeal was allowed for statistical purposes.