TMI Blog1993 (2) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration, the assessee disclosed gross profit of Rs. 32,87,251 on total sales of Rs. 2,82,45,125. The percentage of G.P. comes to 11.6% as against G.P. of last year 10.9%. 2. At the time of framing the assessment order, the ITO noted that the assessee has paid secret commission to the tune of Rs. 5,58,951 in addition to discount amounting to Rs. 3,67,193and sales commission amounting to Rs. 5,41,068. The Assessing Officer allowed performance discount and sales commission but not secret commission on the ground that the assessee has not been able to co-relate the transactions of sales with the alleged payment of secret commission. According to the Assessing Officer the assessee has not proved the genuineness of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission and the facts are similar in the instant case and the same was disallowed. The first appellate authority concurred with the opinion of the Assessing Officer that the products of Sandoz (India) Ltd. do not in fact need any secret commission to be paid as there have a very good market for the products of Sandoz Products. The cases relied upon by the assessee are not applicable in the instant case of the assessee. 4. Aggrieved by the above order, the assessee is in appeal before the Tribunal. The learned authorised representative submitted that as a result of the payment of secret commission, performance discount and sales commission, the turnover of the company jumped by over 1.70 times compared to last year. In this field of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, relying upon the following judgments assessee's representative submitted that the secret commission paid by the assessee is an allowable item of expenditure: Addl. CIT vs. Moolchand Jekisondas Co. (1977) 108 ITR 500 (Guj), EWAC Alloys Ltd. vs. Dy. CIT (1993) 42 ITD 218 (Bom); Sasson J. David Co. (P) Ltd. vs. CIT (1979) 10 CTR (SC) 383 : (1979) 118 ITR 261 (SC); CIT vs. Coimbatore Salem Transport (P) Ltd. (1966) 61 ITR 480 (Mad); CIT vs. Goodlass Nerolac Paints (P) Ltd. (1990) 90 CTR (Bom) 184 : (1990) 188 ITR 1 (Bom); First ITO vs. French Dyes Chemicals Ltd. (1985) 21 TTJ (Bom) 412 (SB) : (1984) 10 ITD 240 (Bom) (SB). Addl. CIT vs. Moolchand Jekisondas Co. In this case the High Court upheld the agreement entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and directions of the top executives of the company which were also approved by the board of directors even though the names and addresses of the recipients were not given and the payments were made for the purposes of business. The Special Leave Petition in this case was preferred by the Department, The Supreme Court rejected the SLP vide SLP (Civil) Nos. 15931, 15932 of 1991) as reported in (1991) 191 ITR (St) 307. First ITO vs. French Dyes Chemicals Ltd. In this case the Tribunal held that secret commission paid by the assessee to employees of customers on regular basis over a number of years to ensure acceptance of assessee's products, though names of recipients could not be disclosed, a negligible percentage of turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission amounting to Rs. 5,41,068 is on higher side. Therefore, we are of the opinion that the justice will be met by allowing the secret commission at 50% of the total claim of the assessee on this head. Assessee will get the benefit to that extent and ordered accordingly. 8. The next ground taken by the assessee is with regard to confirmation of disallowance of conveyance expenses of Rs. 18,910 being 1/4th of such expenses and depreciation on vehicles of Rs. 20,100 being 1/4th depreciation. This amount was disallowed on account of personal use of conveyance. The learned authorised representative submitted that the vehicles were always used for business purpose and, therefore, no disallowance could be made on this count. Regarding the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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