TMI Blog1997 (9) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of law and on facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the disallowance of Rs. 59,842 paid to Shri K. L. Sahni as guarantee commission and in interpreting the circular of the Reserve Bank of India as a condemnation of the practice of the banks asking personal guarantee in the case of public limited companies holding large assets?" The assessee is a public limited company engaged in the business of manufacture and sale of crystal sugar. It was amalgamated with Triveni Engineering Works by an order of the High Court of Delhi with effect from February 1, 1970. In the assessment year 1969-70, the assessee had claimed a deduction of Rs. 59,842 on account of guarantee commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for furnishing personal guarantee; secondly, the commission was allowed only to Shri K. L. Sahni although the other two directors in the company had also furnished the personal guarantees; thirdly, the company had available ample realisable assets wherefrom the bank could realise the loan advanced by it. The Income-tax Officer held that the transaction appeared to be tainted. The Tribunal has maintained the findings recorded by the Income-tax Officer, confirmed in first appeals. In addition, the Tribunal has also held that there was no material to suggest any services were rendered by Shri. K. L. Sahni to the company so as to warrant the payment of commission. The Tribunal further held that Shri Sahni did not run any risk and there was no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses incurred wholly and exclusively for the purposes of the business are to be allowed in computing the income chargeable under the head "Profits and gains of business and profession" under section 37(1) of the Income-tax Act. Section 40 of the Act has been drafted as a proviso to the above said provision. In the case of an assessee which is a company, notwithstanding the provisions of section 37(1), any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or to a person who has a substantial interest in the company or to a relative of the director or of such person, as the case may be, cannot be allowed, if in the opinion of the Income-tax Officer any such expenditure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso the Tribunal had found it as a fact that the guarantee commission was paid to the directors in view of personal risks they undertook in furnishing guarantee on behalf of the assessee and hence the payment of commission was liable to be deducted on the basis of such finding of fact. It is, thus, clear that in both the cases the Division Benches have proceeded on the findings of fact recorded by the Tribunal. In the two ITRs at hand also, the issues are concluded for each of the respective assessment years by findings of fact. As we have already noticed in the factual part of this order, for the assessment year 1969-70, the findings of fact consistently recorded by all the authorities are that the transaction was tainted and the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse; but where there is evidence to consider, the decision of the Tribunal is final even though the court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact." The High Court is not bound to answer the question if it be a question of fact and/or if the question be not arising out of the order of the Tribunal merely because the High Court had called upon the Tribunal to state a case on that question (see CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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