TMI Blog1995 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid on the sale of compressors. The assessee had furnished information regarding the supplies made in respect of which commission was paid and the parties to whom such commission was paid. The payment had been made by cheques and confirmations from the parties to whom commission was paid had also been furnished. The Assessing Officer made enquiries from the parties to whom assessee had sold compressors in respect of which commission was claimed to have been paid. The said purchasers gave in writing to the Assessing Officer that they had dealt with the assessee directly without there being any intermediary. After collection of the evidence from the purchasers, the Assessing Officer confronted the assessee with the material that was collected and asked the assessee to explain as to why commission may not be disallowed. The assessee made written submissions explaining the nature of service rendered by the parties and made a request to the Assessing Officer to summon parties by issue of notice under section 131. In this connection, diet money was also offered to be deposited. The Assessing Officer did not issue any notices under section 131 to the persons to whom commission was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g failed to issue notices under section 131 to the parties, his action of disallowance of commission was unwarranted and the CIT(A) was not justified in setting aside the assessment. He should have according to the learned counsel deleted the addition. More so, for assessment year 1983-84, the Tribunal has deleted the addition made on similar grounds. 4. The learned Departmental Representative, on the other hand, contended that the decision of the CIT(A) is contrary to law in so far as the burden of proof has wrongly been held to be on the department. The assessee had identified the parties to whom commission was stated to have been paid. The Assessing Officer had made enquiries from the purchasing parties in respect of which commission was stated to have been paid. The said parties had informed in writing that they had directly dealt with the assessee and that there was no agent in regard to the supplies made to them. The information collected by the Assessing Officer was confronted to the assessee. According to Shri Haldhar, the burden was on the assessee to rebut the evidence. Moreover, it was for the assessee to establish the running of services and the Assessing Officer cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kings and had specifically confirmed that they had directly dealt with the assessee and purchased the compressors without any assistance from third parties ; (c) They are also confirmed that the purchases had been made on the basis of tenders/lowest quotations/DGSD rate contract basis and that no party was instrumental in getting orders to the assessee. 7. The assessee was, accordingly, confronted by the Assessing Officer vide letter dated 2nd December, 1987 with the information collected and asked : (a) to prove the genuineness of the parties to whom the commission was paid giving their permanent Account No. and Income-tax ward, (b) documentary evidence about their having rendered services to the assessee leading to the sale of compressors, (c) the fact of their having received the commission allegedly to have been paid. 8. The assessee vide letter dated 5th January, 1988, explained that the details of the parties to whom commission was paid had been filed before the Assessing Officer and the correspondence relating to the services rendered by them had also been brought to the notice of the Assessing Officer. It was also stated that the payment had been made by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been referred to in para (i) at page 11 of the assessment order. (e) The letters written by the so-called agents and branch office seem to have been typed on the same typewriter. (f) The language used by almost all the agents in their communications is almost similar and the rate of commission is almost the same. (g) From the correspondence obtained from M/s. Bharat Petrol Corporation Limited, it was clear that the said Corporation had dealt with the officers of the assessee directly and not with any agent of the assessee as claimed. Similarly the correspondence from M/s. Manganese Ore India Ltd., has been referred to in support of the finding that the company had directly dealt with the assessee-company and not through agents. 10. It is thus seen that in this case, there is some evidence furnished by the assessee in support of the claim and the Assessing Officer has also collected evidence in rebuttal thereof. Appealing the rules of evidence, we have no doubt in our minds that it is the duty of the assessee to establish that the payment of commission has been made to the agents on account of business considerations for the services rendered. The fact that the payment ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the duty of the assessee to establish the rendering of the services by the agents and the notices issued under section 131 would be merely to help the assessee in enforcing the attendance. The witnesses shall remain the witnesses of the assessee. The assessee shall be free to adduce such evidence before the Assessing Officer in order to establish its claim and to rebut the evidence, available with the Assessing Officer as has been referred to in the assessment order. The appeal of the revenue to that extent is accepted and the order of the CIT(A) modified. The appeals of the assessee for both these years are accordingly dismissed and the appeals of the revenue are partly allowed. 11. In assessment year 1985-86, the revenue has raised two more grounds. One ground being Ground No. 4 is relating to the relief of Rs. 12,681 under section 37(2A). The Assessing Officer had made disallowance of Rs. 32,385 under section 37(2A). The CIT(A) has allowed a statutory deduction of Rs. 5,000 and expenses on annual day event of Rs. 7,681. We do not find any infirmity in the order of the CIT(A) in having allowed the aforementioned relief to the assessee. The annual day expenses incurred on emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Orissa High Court held the deduction under section 80HH is permissible in respect of profits and gains from the industrial undertaking and the computation of gross total income computed in accordance with the provisions contained in sections 30 to 43A would not be relevant for the purposes of the deduction under section 80HH. A reading of the decision does not indicate the assessment year with which Their Lordships of the Orissa High Court were concerned. It seems that the assessment year involved before their Lordships of the Orissa High Court in the aforementioned case was an assessment year prior to 1st April, 1981 as with effect from 1st April, 1981, section 80AB has been specifically inserted to provide as under : " 80AB. Deductions to be made with reference to the income included in the gross total income.----Where any deduction is required to be made or allowed under any section (except section 80M) included in this Chapter under the heading 'C-Deductions in respect of certain incomes' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. Shriram Refrigeration Industries Ltd. [1992] 197 ITR 431 (Delhi). We, accordingly, do not find any merit in this ground of appeal of the revenue. 16. In assessee's appeal for assessment year 1986-87, there is a ground relating to disallowance of fees paid to Registrar of Companies for increase in the authorised capital of Rs. 22,500 and Rs. 500 for issue of bonus shares. The issue relating to disallowance of Rs. 22,500 is covered against the assessee by the decision of the Delhi High Court in the case of Bharat Carbon Ribbon Mfg. Co. Ltd. v. CIT [1981] 127 ITR 239. The disallowance is accordingly confirmed. The claim of Rs. 500 is covered in favour of the assessee by the decision of the Bombay High Court in the case of Bombay Burmah Trading Corpn. Ltd. v. CIT [1984] 145 ITR 793. Respectfully following the decision of the Bombay High Court, the relief of Rs. 500 is allowed to the assessee. 17. For 1987-88, the first ground raised by the revenue is relating to the disallowance under section 40A(5) in regard to cash payments of house rent allowance. We have dealt with this issue for assessment year 1986-87 as above. For the same reasons, this ground of appeal is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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