TMI Blog1984 (1) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to appreciate the rival contention urged in support and rebuttal of these questions, a few facts need be noticed. The assessment year with which we are concerned in this reference is 1970-71, the corresponding accounting year being financial year 1969-70. The assessee carries on the business of manufacturing and selling textile machinery. It also derived income as a partner in the firms of M/s. Swastic Construction Company and M/s. Ajit Construction Company. It made a return of income for the aforesaid assessment year showing a total income of Rs. 6,86,198. The ITO, however, assessed the income at R s. 9,22,075. In the course of the assessment, the assessee made a two fold claim, one pertaining to the payment of commission to one Shri Naresh K. Patel and another pertaining to the deduction under s, 80-I of the I.T. Act, 1961. . The assessee claimed that it had paid aggregate commission of Rs. .1,09,906 in the relevant accounting year. . Out of this aggregate amount of commission, the assessee claims to have paid, Rs. 14,250 to one Shri Naresh K. Patel by way of commission on the sale of Pre-set-Felt Finishing Range manufactured by the assessee-company to M/s. Arvind Mills Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO that the other three items were not liable to be included. He, therefore, partially allowed the appeal to that extent. Further appeal to the Tribunal met with the same fate. However, in the course of the hearing of the appeal, the assessee claimed that the ITO, and for that matter the AAC, were not justified in deducting the entire amount on these various counts since, in the very nature of things, the assessee had spent some amounts for purposes of earning erection charges, or rent for hiring out the machinery or for export of goods or in sale of the assets. The Tribunal could not persuade itself to accept this alternative claim of the assessee since in its opinion the assessee did not press this in the memo of appeal as one of its grounds on which it was aggrieved by the order of the AAC and, in any case, it was not open to the assessee to raise this claim at that late stage. The appeal of the assessee, therefore, failed before the Tribunal. It is in this backdrop that the questions set out above have been referred to us. Re : Questions Nos. 1 and 2 : It is trite position in law that in exercise of the reference jurisdiction under s. 261 of the I.T. Act, 1961, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Champakbhai of Swastic Group to Shri Arvindbhai. He admitted that he received commission in this transaction only and he had not undertaken any business on commission from September, 1970 to 1973, when he was in the United States of America. The Revenue authorities as well as the Tribunal found, on an appreciation of the evidence--oral as well as documentary--that said Shri Naresh K. Patel had not rendered any services and, therefore, not entitled to any commission as claimed to have been paid by the assessee-company. This finding of fact has been challenged in this reference before us. By the precise question which has been set out for our advice, this finding has been challenged as perverse and, in any case, one which no reasonable person could have reached. It has been urged on behalf of the assessee that the Tribunal has completely ignored the important evidence by which it was clearly established that Shri Naresh K. Patel had not only brought the purchaser and the supplier together but has also rendered services inasmuch as he along with Shri Champakbhai Shah negotiated for the order. On behalf of the Revenue, the finding of the Tribunal was sought to be supported on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies together. But there was no occasion for the mill-company to state so since no question has been put to the mill-company by the ITO concerned particularly after he recorded the statement of Shri Naresh K. Patel. We are, therefore, of the opinion that the statement of Shri Naresh K. Patel has remained uncontroverted. It would, therefore, be difficult to conclude, as has been done by the subordinate revenue authorities as well as by the Tribunal, that no services were rendered by him. If the statement of Shri Naresh K. Patel had gone unchallenged, the only conclusion which a reasonable person could reach is that he had rendered some services in introducing the parties to each other. The matter does not rest there. There is an unequivocal statement in the letter of Arvind Mill Company where they have stated that on behalf of Swastic Textile Trading Company, S/Shri Champakbhai Shah and Naresh K. Patel had been to the mill-company to negotiate the order. No further attempt has been made by the ITO to find out as to whether this statement of the mill-company was correct or not. The ITO had also not called Shri Naresh K. Patel again in order to find out whether the aforesaid statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. On behalf of the assessee, it is urged that the alternative claim could not have been, by any stretch of imagination and without violence to the language, treated as a new claim since in the ultimate analysis it pertains to the justification for the exclusion of items either wholly or partially from the manufacturing profit for purposes of s. 80-I deductions. On a matter of principle also, it is urged on behalf of the assessee that the Tribunal is competent to pass such orders in appeal as it thinks fit and the jurisdiction of the Tribunal is in no way restricted to the determination of the question raised before the departmental authorities. We are of the opinion that the grievance of the assessee is justified. The scope and width of the jurisdiction of the Tribunal has been succinctly stated by the Supreme Court in CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710, where the question was as to whether the Tribunal was justified in allowing the claim of Rs. 93,215 which the assessee-mill-company had spent for introduction of " Casablanca conversion system " in its spinning plant and, therefore, the assessee-company was entitled to development rebate on that amount. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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