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TMI Blog2007 (5) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... n scrutiny of the Profit and Loss A/c of the Assessee noticed that the commission paid by the Assessee had increased to Rs.55,68,854/- from Rs.33,34,235/- in the last year. The Assessee was required to file details of the commission. It was found by the Assessing Officer that the Assessee paid substantial commission to two parties namely M/s Associates Agencies and M/s Sawhney Tyres @ 3% for the period from April, 1990 to September, 1991. Earlier the commission was paid @ 2% from May, 1988 to March, 1989 and it was increased to 2.5% from 1st April, 1989 till March, 1990. The total commission was paid to the tune of Rs.55,68,854/- on total sales of Rs.18,56,28,522/- which was @ 3% whereas for the previous year the commission was much less. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax (Appeal), Revenue filed appeals before the Tribunal and the Tribunal vide its impugned order allowed the appeals filed by the Revenue. 7. It has been contended by learned counsel for the Assessee that the commission was increased by 0.5% only on account of heavy expenses incurred by the selling agents on account of opening of two branches one at Calcutta and other one at Lucknow. He further contended that the sole selling agents did not carry out any other business except conducting the sale of the goods manufactured by the Assessee and the sales of the Assessee has increased by 43% during the relevant year and in the process, the increase in any expenses incurred by the selling agents for conducting their sales had resulted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im to put itself in the armchair of a businessman or in the position of the board of directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case." 9. On the other hand, it has been contended by learned counsel for Revenue that the increase in the rate of commission remained effective only for the year under consideration and if this plea of Assessee is taken as correct that it was increased due to the opening of new branches, then there was no reason for reducing the commission from the next year and as such there appears to be no justification to increase the commission from 2.5% to 3%. 10. The foremost question for consideration is as to whether any substantial questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 SC 1041, it has been laid down that existence of substantial question of law is sine qua non for the exercise of jurisdiction. It was held:- "A bare look at Section 100 C.P.C. shows that the jurisdiction of the High Court to entertain a second appeal after the 1976 amendment is confined only to such appeals as involve a substantial question of law, specifically set out in the memorandum of appeal and formulated by the High Court. Of course, the proviso to the Section shows that nothing shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if the Court is satisfied that the case involves such a question. The proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e face of the case, but it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances the court may intervene. The words 'substantial question of law' has not been defined. But the expression has acquired a definite connotation through a catena of judicial pronouncements. Usually five tests are used to determine whether a substantial question of law is involved. They are as follows:- (1) whether, directly or indirectly, it affects substantial rights of the parties, or (2) the question is of general public importance, or (3) whether it is an open question in the sense that the issue has not been settled by p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoning given by the Tribunal that increased rate of commission remained effective only for the year under consideration and if the intention of the Assessee was to compensate its agents for increased expenditure incurred by them on account of opening of new branches at Calcutta and Lucknow, then there would have been no ground for the Assessee to have reverted back to the old rate of commission that is 2.5%. Under these circumstances, there appears to be no justification to increase the commission from 2.5% to 3%, only for the year under consideration and thereafter when the sale is on increase, there was no justification for reducing the rate of commission. 16. Since it is purely a finding of fact given by the Tribunal, we find no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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