TaxTMI 
TaxTMI 
1982 (2) TMI 144
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....arantee commission payment under the provisions of s. 40(C) of the IT Act, 1961 only; ignoring the fact that a reference made u/s 256(1) of the IT Act, 1961, is pending for adjudication before the Hon'ble High Court of Judicature for Rajasthan at Jodhpur on this point." The assessee had claimed deduction for payment of guarantee commission to five persons. The details of the claim made by the assessee and the disallowances made by the ITO are as under: Asst. yr. Claim for guarantee commission Disallowance made by ITO Guarantee commission allowed by the ITO 1971-72 74,708 52,988 21,720 1972-73 1,03,737 82,017 21,720 1973-74 90,709 68,989 21,720 The ITO had made the disallowances of the guarantee commission as mentioned abov....
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....ointed out earlier that the matter had earlier came up before the Appellate Tribunal and the Tribunal had recorded a clear finding the provisions of s. 40A were not applicable and had restored the matter to the AAC only with reference to the provisions of s. 40(c). We, therefore, do not find any merit in the ground of appeal raised by the Revenue. The same is, therefore, dismissed. 4. The second ground of appeal which is again common for all the assessment years under appeal is that Commr. (Appeal) erred in holding that the guarantee commissions paid by the assessee could not be said to be excessive or unreasonable and deleting the disallowance of Rs. 52,988 for the asst. yr. 1971-72 Rs. 82,017 for the asst. yr 1972-73 & Rs. 68,989 for the....
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.... for which they were to be paid @ 1 % commission of the net sales. We have already noted above the claim on account of guarantee commission @ 1 % of the net sales for the three assessment years and the disallowance made by the ITO. The details showing the finances provided by the five person for the three assessment years are, however, stated as below: Asst. Yr. 1971-72 1972-73 1973-74 1. Amount of guarantees furnished 21,72,000 21,72,000 21,72,000 2. Amount of finance procured 11,56,758 7,26,672 8,80,896 3. Amount of finance provided 37,817 37,817 18,170 33,66,775 29,36,489 30,71,066 The turnover of sales for the three assessments as under: 1971-72 78,85,909 1972-73 1,11,96,486 1973-74 94,30,699 Shri Dani, the ld....
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....atement showing the comparative cost of finance including guarantee commission paid, with rate of borrowing from open market. Asst. yrs. Particulars 1971-72 1972-73 1973-74 1. Average rate of interest on borrowing 9.25 % 10.25% 10 % 2. Percentage of guarantee commission paid to total financial arrangement 2.20 % 3.50 % 2.95 % 3. Total cost of finance (1+2) 11.45 % 13.75 % 12.95 % 4. Rate of borrowing from open market excluding brokerage 13 % 14 % 15 % By referring to the above figures, he pointed out that for the asst. yrs.1971-72 to 1973-74, the total expenses on interest and guarantee commission were at 11.45 % 13.75 % and 12.95 % for the three assessment years respectively and against the rate of borrowings from the....