9911796707
TMI Blog2008 (9) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... year relevant to the assessment year 1989-90 ? (ii) Whether, on the facts and in the circumstances of the case and having regard to the true meaning of the word 'accrual', the assessee had a right to receive the commission income in the previous year relevant to the assessment year 1989-90 and there was accrual of such income in the hands of the assessee during the said period?." 2. It appears that the assessee was whole time director of the company in question, namely, M/s. Hindustan Safety Glass Works Limited (hereinafter referred to as "the said company"). As per the conditions of service, the assessee was to receive commission at the rate of 1 per cent. on the net profits of the said company apart from the monthly salary and certain p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Being aggrieved from the order so passed by the Commissioner of Income-tax (Appeals), the assessee filed an appeal before the learned Tribunal. It appears from the facts placed before the learned Tribunal that the commission amount was ascertained only after the finalisation of the accounts of the said company and determination of the profits earned by the said company which would be reflected at the end of the said accounting year and not before. The said company had also not considered the said amount (commission) for the purpose of tax deduction at source for the said assessment year being 1989-90. The assessee had shown the said commission as part of his income for the assessment year 1990-91 and also duly paid the tax payable therefrom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is only after the accounts of the company are finalised and the commission amount is ascertained then it becomes receivable by and payable to the assessee. He further relied upon a decision of the Supreme Court in CIT v. Birla Gwalior (P.) Limited [1973] 89 ITR 266. In this case, the managing agent gave up the managing agency commission after the end of the financial year but before the accounts of the managed company were made up. In the managing agency agreement, no date was stipulated for payment of the commission. The question before the hon'ble Supreme Court was as to whether the commission was given up by the managing agent before it accrued as income and was, therefore, not liable for taxation in the hands of the managing agent. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment did not make any specific provision as to when commission, over and above the minimum remuneration, would accrue. The court was called upon to decide whether the commission, over and above the minimum remuneration, relating to the previous year ended March 31, 1970, was assessable in the assessment year 1970-71. At page 919 of the reports, the hon'ble Madras High Court held as follows "In the present case, we have already referred to the terms of the managing agency agreement under which there is a specific provision relating to the minimum remuneration being payable to the managing agent at the end of every month. As regards the rest of the commission, there is no specific provision as to when it accrues. In the absence of such a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to him, the learned Tribunal presumed that the commission became due during the period to which it related overlooking the fact that the terms and conditions of the service of the appellant did not specify any date for its payment. 11. He further contended that the judgment of this court in Bhuban Mohan Banerjee v. CIT reported in [1956] 29 ITR 229 shall not have any application in the facts and circumstances of this case, since there was no dispute as to the date when the commission income became due. He further submitted that it is not the contention of the appellant that commission income should not be taxed in the year in which it became due and was taxable in that year and not in the year of receipt. The question raised by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
