Court denies intervention in taxation of forgone commission income by M/s. Sujan Singh Sadana.

The court declined to intervene in the matter concerning the taxation of forgone commission income by the assessee, M/s. Sujan Singh Sadana. The court found the issue to be factual rather than legal, emphasizing the lack of evidence supporting the business reasons for forgoing the commission. As the commission income was not received during the assessment years and no legal question regarding its taxation arose, the court rejected the reference application under the Income Tax Act.

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Issues:
1. Whether the sums of Rs. 1,60,806 and Rs. 6,290 were liable to tax in the hands of the assessee for the assessment years 1967-68 and 1968-69, respectivelyRs.

Analysis:
The case involved M/s. Sujan Singh Sadana, engaged in money-lending and military contracts, who had subcontracted military supplies to three entities during the assessment years 1967-68 and 1968-69. The dispute arose when the Income Tax Officer (ITO) included Rs. 1,60,806 and Rs. 6,290 as taxable income for the respective years, alleging that the commission income had accrued to the assessee and was liable for taxation. The assessee claimed to have forgone the commission due to heavy losses suffered by the subcontractors. The Appellate Authority Commission (AAC) and the Income-tax Appellate Tribunal upheld the ITO's decision, stating that the right to receive commission was acquired upon billing and no evidence was presented to prove the forgone commission was due to business reasons.

Subsequently, the assessee filed reference applications under s. 256(1) of the Income Tax Act, consolidating both applications for the court's consideration. However, the court found no legal question to decide, emphasizing that the issue of forgone commission was a factual matter. The court noted that no argument was made regarding the timing of income recognition, as the commission income was not actually received during the assessment years. The court ultimately declined the reference, stating no legal issue required determination.

In conclusion, the court held that the question of forgone commission was a factual matter, not warranting legal intervention. The court highlighted the absence of evidence supporting the business rationale behind the alleged commission forgone by the assessee. As no legal question arose concerning the taxation of the commission income, the court declined the reference and returned it unanswered.

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