TMI Blog1982 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 to 1968-69, respectively ? " The assessee is a company carrying on the business of manufacturing and selling paints, varnishes, pigments and so on. The assessment years to which this reference relates are 1963-64, 1964-65, 1965-66, 1966-67, 1967-68 and 1968-69. In the previous years relevant to the said assessment years, the assessee claimed deductions out of their income in respect of the aforesaid sums as selling expenses. These selling expenses were claimed on the footing that they were commissions paid to the employees of certain purchasers in order to promote the sales of the assessee's products. Although demanded, the assessee did not furnish any details whatever regarding the names and addresses of the parties to whom such commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er just referred to, disallowed only one-half of the selling expenses claimed by the assessee and allowed the remaining half as deduction. The assessee preferred appeals before the Income-tax Appellate Tribunal from the aforesaid order of the Commissioner in respect of the assessment year 1963-64, and from the orders of the AAC in respect of the assessment years 1964-65 to 1967-68. The department filed an appeal from the order of the AAC in respect of the assessment year 1968-69. Before the Tribunal, the contention of the assessee was that these selling expenses were payments made to keep the customers' employees at various levels happy. It was urged by the assessee that these payments were made by the assessee in cash to its salesmen in ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the expenses claimed to have been paid as secret commissions were, in fact, paid as such, in the absence of the names and addresses of the parties to whom they were alleged to have been paid. This is clear from the observations made by the Tribunal in para. 8 of its order and the reliance placed by the Tribunal on the judgment of another Bench of the Tribunal as can be seen from para. 9 of its order. We may mention here that the Tribunal disposed of all the aforesaid appeals by a common judgment from which this reference arises. The submission of Mr. Patil, the learned counsel for the assessee, is that, in the nature of things, it was not possible for the assessee to disclose to the ITO the names of the parties to whom secret commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corresponds to s. 37 of the said Act.. The ITO disallowed the claim solely on the ground that it had not been proved that the representatives had, in fact, expended the sum for the purposes for which the same was paid to him. It was held that the proof of actual payment by the representative was not necessary and the assessee was, therefore, entitled to the deduction under s. 10(2)(xv) of that Act. Now, we may point out that there is a significant difference in the facts of that case and those in the case before us. In that case, the assessee paid to its representative, apart from general commission, a commission of 5 percent. for contingency expenses under an agreement. That agreement was not challenged as not genuine or bona fide. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly and exclusively for the purposes of business or profession and we totally fail to see how it could be said that the assessee was not bound to prove that the said amounts claimed to have been paid as secret commissions were actually laid out or expended as secret commissions before becoming entitled to deduction under s. 37. As the assessee refused to furnish the names and addresses of the parties to whom such secret commissions had been paid, it was perfectly open to the Tribunal not to accept that the assessee had, in fact, paid those amounts by way of secret commissions. It was for the Tribunal to decide, as the final judge of facts, as to whether the case of the assessee that these amounts were actually paid by way of secret comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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