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TMI Blog1981 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... o us under s. 256(1) of the I.T. Act, 1961, the following question of law stands referred to us for our opinion: "Whether, on the facts and in the circumstances of the case, incomputing the income of the assessee for 1964-65 the sum of Rs. 52,966 is deductible ? " The assessee a private limited company engaged in the manufacture and sale of solvent extraction plants. There was another company ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riated the profits. The value of the machinery remaining to be supplied was Rs. 10-59 lakhs. Under the agreement the assessee-company contracted to complete the 'execution' of the pending contracts and also agreed to indemnify the oil company against any claim or demands in respect of the completed contracts for Rs. 22.01 lakhs.Inrespect of this indemnity the oil company agreed to pay the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al outlay. The assessee-company carried the matter in appeal to the AAC. It was urged before the AAC that the actual profit earned by the assesseecompany on fulfilling the pending contracts had been offered for assessment. The assessee-company, according to the argument, would not have been in a position to execute the contracts and supply machinery of the value of Rs. 10.59 lakhs and earn these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 8.49 lakhs were already executed and the remaining part was completed in the immediately next year, which would only show that there was no enduring benefit that had been acquired. If the assessee had not paid the commission, the assessee would not have been able to get any profit. It will be seen from the clause extracted above that the payment of 5% to the oil company was for the purpose of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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