TMI Blog1989 (1) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act, 1961, the Commissioner of Income-tax prays that the Tribunal be directed to draw up a statement of case and refer the following common question of law (though the amounts differ for each year and the question is also slightly differently worded) for the opinion of this court: "Whether, on the facts and in the circumstances of the, case, the payment of amounts as guarantee commission to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,27,406 and Mr. P. B. Kotak was paid a sum of Rs. 33,010. The amount was paid for giving personal guarantees to various banks such as the Central Bank, Canara Bank, Dena Bank, Syndicate Bank and Bank of Tokyo. The Incometax, Officer disallowed the amount paid as guarantee commission and the disallowance was affirmed by the Appellate Assistant Commissioner. The assessee appealed to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular the assessee had no choice but to give personal guarantees of the directors as the banks concerned insisted on them. The Tribunal noticed that long after the circular, that is, even as late as August 27, 1975, the Canara Bank insisted on Personal guarantees. Further, the Dena Bank, by its letter of August 22, 1972, had required personal guarantees ; the Bank of Tokyo, by its letter dated Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of India made it clear that personal guarantees were not normally to be taken and, consequently, the guarantee commission paid to the directors was not a legitimate business expenditure. He also submits that the position for the assessment years prior to 1970 is different from the position for the subsequent years in view of the abovementioned circular of the Reserve Bank of India and no guarant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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