Guarantee commission and sales commission were held deductible under the super profits tax rules after earlier favourable quantum findings.

Payments of guarantee commission and commission on sales of sugar were treated as meeting the statutory requirements under rule 3 of the First Schedule to the Super Profits Tax Act, 1963, because the same disallowances had already been decided in the assessee's favour in the earlier quantum proceedings on the very same amounts. On that basis, the High Court found no reason to take a different view in the reference and held the related disallowance to be unsustainable. The questions referred were answered in favour of the assessee and against the department.

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Issues: Whether the payments towards guarantee commission and commission on sales of sugar satisfied the requirements of rule 3 of the First Schedule to the Super Profits Tax Act, 1963, and whether the related disallowance was rightly deleted.

Analysis: The reference arose from an assessment under the Super Profits Tax Act, 1963 for assessment year 1963-64 and was consequential to the decision in the assessee's quantum appeal. The same disallowances of guarantee commission and commission on sales had already been examined and decided in the assessee's favour in the earlier decision concerning the very same amounts. On that footing, the questions referred did not warrant a different answer.

Conclusion: The payments were treated as satisfying the statutory test and the disallowance was held to be unsustainable. The questions were answered in favour of the assessee and against the department.

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