TMI Blog2007 (8) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... court was delivered by M.M. KUMAR, J. - At the instance of the revenue the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, 'the Tribunal'), has referred the following question of law for determination of this Court by exercising jurisdiction under Section 256(1) of the Income-tax Act, 1961 (for brevity, 'the Act'), which is stated to have emerged from order dated 26.11.1997, passed in I.T.A. No. 155(ASR)/1991, in respect of assessment year 1988-89:- "Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal, was right in law in holding that commission paid by the assessee to the agents is an allowable expenditure?" 2. Brief facts may first be noticed. The assessee-responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to procure the order which in fact were placed direct by the institution with M/s Indian Drugs Pharmaceuticals Ltd. (IDPL). The main job of the assessee firm was that of liaison and the agents appointed by the assessee firm assisted in persuading the institutions to place the order with IDPL and arrange acceptance of supply made by the IDPL. It was to remit the sale price as per the bills raised by the IDPL. Therefore, the agents were instrumental in getting all the terms of the contract between IDPL and the assessee firm complied with and they were appointed for commercial expediency. The Tribunal went on to observe as under:- "10. ……To achieve the turnover of Rs. 1,90,37,959/- it has to appoint sales agents to whom it has paid comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of the assessee- firm.' 5. The Tribunal also observed that the expenditure incurred on payment of commission to the agents was allowable under Section 37 of the Act and for parity of reasoning it relied upon a judgment of Hon'ble the Supreme Court in the case of Sassion J. David and Co. P. Ltd. v. CIT (1979) 116 ITR 261, which interpreted Section 10(2)(xv) of the Act. Accordingly, it held that the expenditure of payment of commission was for the purpose of the assesee's business. 6. The Tribunal also examined as to whether all the agents were relatives of one partner or the other and concluded that except Mrs. Alka Sharma, who happens to be the wife of Shri Daljeet Sharma, partner, none-else was the relative within the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o cover all 13 districts of Punjab and Chandigarh left to itself. Therefore, these are questions of fact as has been held by a Division Bench of this Court in the case of Commissioner of Income-tax v. Ishwar Prakash Bros., (1986) 159 ITR 843 (P H). Likewise, reliance could be placed on a judgment of Hon'ble the Supreme Court in the case of Shazada Nand Sons v. C.I.T., (1977) 108 ITR 358, wherein it was held that the commission paid to two employees of the assessee firm was reasonable having regard to all the circumstances of the case and was allowable as a deductible expenditure under Section 36 (1)(ii) of the Act. Hon'ble the Supreme Court was dealing with a matter in respect of assessment year 1960-61 to 1963-64. For the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
