TMI Blog1980 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing question of law : " Whether, on the facts and in the circumstances of the case, the I.T. Appellate Tribunal was justified in holding that the provisions of s. 40A(2) are not applicable with regard to the additions of Rs. 6,81,987 and Rs. 70,257 made by the ITO? " The relevant assessment year is 1971-72, the accounting period for which ended on Diwali, 1970. The facts briefly are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as commission, it could not have made any profit on the sale of bidis in addition to the commission and that this amount of gross profits must be taken to be payment of additional commission by the assessee-firm. In this view of the matter, this amount Was added under s. 40A(2) to the income of the assessee. As regards the purchase of tobacco made by the assessee from the firm of M/s. Mohanlal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed, it is clear that the amount of profit earned by M/s. Lalchand Shyamsunder on the sale of bidis cannot be taken to be an expenditure incurred by the assessee within the meaning of s. 40A(2)(a). The expenditure incurred by the assessee was the commission. Even if the assessee sold bidis to the sole selling agents at a price less than the market rate, the difference between the market rate and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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