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TMI Blog1971 (9) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... s of assessment and Income-tax Case Numbers: C.A. No. I.T.C. No. Assessment year Name of company 1364/67 28-D/65 1952-53 Basti Sugar Mills 1365/67 27-D/65 1950-51 ,, 1366/67 23-D/65 1948-49 ,, 1367/67 21-D/65 1951-52 ,, 1368/67 20-D/65 1950-51 Nawabganj Sugar Mills 1369/67 25-D/65 1948-49 ,, 1370/67 26-D/65 1951-52 ,, 1371/67 24-D/65 1949-50 ,, 1372/67 29-D/65 1952-53 Punjab Sugar Mills 1373/67 22-D/65 1955-56 ,, The Basti Sugar Mills Company Ltd., which is the appellant in Civil Appeals Nos. 1364 to 1367, owned two sugar factories at Basti and Waltharganj. It is their case that for the purpose of selling their output of sugar they appointed selling agents at a commission of 12 as.% of all sales of sugar effected through the agents. Their selling agent prior to 1944 was M/s. Gursarandas Kapur & Sons at Kanpur. On July 26, 1944, by a resolution of the board of directors, the company appointed M/s. Gokul Nagar Sugar Mills Co. Ltd. as the selling agents at 12 as.% commission. In the course of the original assessment for the year 1947-48, which was completed on March 10, 1950, the Income-tax Officer called upon the said company to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naging agent of all the three appellant companies are M/s. Narang Brothers Ltd. and their chairman was Dr. Gokulchand Narang. The selling agent of the three appellants is also the commission agent, namely, M/s. Gokul Nagar Sugar Mills Co. Ltd. The controversy before the income-tax authorities related to the claim made by all the appellants for deducting as expenditure of the business of the companies, the selling agency commission paid to M/s. Gokul Nagar Sugar Mills Co. Ltd. In respect of some years the jurisdiction of the Income-tax Officer to take action under section 34 of the Act was also challenged. In respect of the assessment year 1952-53 relating to Nawabganj Sugar Mills Co. Ltd., the evidence, both oral and documentary, was let in by the assessee that M/s. Gokul Nagar Sugar Mills Co. Ltd. were the selling agents and that the commission paid to them as selling agents should be deducted as business expenditure. The evidence so let in was treated as common in respect of the claims made by all the three appellants. The Income-tax Officer held that all the three companies were controlled and supervised by Dr. Gokulchand Narang. He further held that M/s. Gokul Nagar Sugar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Tribunal was justified in holding that no services were rendered by M/s. Gokul Nagar Sugar Mills Co. Ltd. to M/s. Nawabganj Sugar Mills Co. Ltd.? (2) Whether, in holding as they have done, the Tribunal was justified in giving its decision without taking into account the statement of Shri Ram Sahai Dhir and the receipts showing the commission paid to M/s. Gursarandas Kapur and some sub-agents of the recipient company? (3) Whether, in view of the facts and in the circumstances of the case, the Tribunal has rightly concluded that Dr. Sir G. C. Narang signed letters acting as the chairman of the Nawabganj Sugar Mills Co. Ltd., when he had no capacity to deal with the sub-agents in that capacity? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the provisions of section 34(1)(a) were rightly invoked?" By its order dated February 19, 1965, the Appellate Tribunal rejected the said applications on the ground that no question of law arose from the order of the Tribunal and that the decision of the Tribunal was exclusively on facts. The appellants filed applications before the Delhi High Court un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Desai, hence, urged that the High Court was not justified in declining to direct the Appellate Tribunal to refer questions Nos. 1 to 3. Mr. R. H. Dhebar, learned counsel for the department, has referred us to the findings recorded by the Income-tax Officer, the Appellate Assistant Commissioner as well as the elaborate discussion contained in the order of the Appellate Tribunal, and pointed out that all relevant material on record has been taken into account by all the authorities, including the Appellate Tribunal and that the appellants can have no grievance in that regard. All material facts have been considered and findings have been recorded on facts against the appellants that M/s. Gokul Nagar Sugar Mills Co. Ltd. rendered no service whatsoever as selling agent and that the materials on record conclusively establish that the appellants themselves were dealing with their sub-agents direct. The learned counsel further pointed out that the Income-tax Officer summoned Dr. Gokul Chand Narang under section 37 of the Act to produce the correspondence with the sub-agents as well as the sugar mills. Only 13 letters spread over a period of three years written by Dr. Gokul Chand Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellate Tribunal in paragraph 7 of its order has considered a telegram sent on September 1, 1948, to M/s. Ramdev and Co. by the chairman of Nawabganj Sugar Mills Co. Ltd. That telegram states that the agency of M/s. Gursarandas Kapur and Sons has been terminated and M/s. Ramdev and Co. is asked to sell and freely secure challans. Ram Sahai Dhir in his evidence has stated that M/s. Gursarandas Kapur and Sons were the selling agent of the appellants originally and that he started his own sugar business in or about 1947. Therefore, the telegram, as held by the Appellate Tribunal, clearly shows that the appellants were having direct dealings with Ramdev and Co. and that M/s. Gokul Nagar Sugar Mills Co. Ltd. is nowhere in the picture. This telegram also shows that the privity of contract between the appellants and Ramdev and Co. will not be there if Ramedev and Co. were the sub-agents appointed by M/s. Gokul Nagar Sugar Mills Co. Ltd. Therefore, it is clear that the relationship between the appellants and M/s. Ramdev and Sons of which Sri Ram Sahai Dhir is the sole proprietor has been considered by the Appellate Tribunal. Regarding Shiv Nand Verma, his evidence has only to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch which could on that evidence be reasonably reached. The statement in the order of the High Court that the Appellate Tribunal has not referred to the evidence of Ram Sahai Dhir as such is, prima facie, correct. But, the High Court missed the crucial fact that his evidence is really as proprietor of M/s. Ramdev and Co. and the relationship between this company and the appellants has been considered by the Appellate Tribunal. As laid down by this court in Udhavdas Kewalram v. Commissioner of Income-tax, the Income-tax Appellate Tribunal has to act judicially in the sense that it has to consider with due care all material facts and the evidence in favour of and against the assessee and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. From the discussion contained above it is clear that it cannot be said that the Appellate Tribunal in the case before us has omitted to consider any material fact or any material piece of evidence. To conclude we are in agreement with the findings of the High Court that no point of law arises out of questions Nos. 1 to 3 and the High Court was justified in decl ..... 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