TaxTMI 
TaxTMI 
1990 (12) TMI 305
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.... the assessing officer took the view in respect of assessment years 1981-82 to 1983-84 that the agreement dated March 31, 1977 appointing the selling agent was a simulate arrangement or a subterfuge for reducing the sales to avoid the tax liability. The assessing officer took such a view for the reasons: (1) that trade discount was allowed at the rate of 33.5 per cent to the selling agent; (2) that sales to the selling agent were shown at much lesser amount excluding the trade discount, whereas excise duty was paid on the assessable value which included the trade discount; (3) partners in the assessee-firm and the selling agent are common, that uncommon partners are related to the partners of the assessee-firm; (4) that expenses for the tel....
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....greement dated March 31, 1977, is a colourable device to reduce the sales to avoid the tax liability and that the selling agent is a benami firm of the assessee. To find out the benami character, a thorough investigation is required and so many circumstances have to be seen. It will depend on the facts and circumstances of each case whether a firm is of benami character, for example, constitution of the firm, actual services rendered by the firm, independent functioning of such firm, source of capital investment, whether such firm has full infrastructure to carry on the business, the business premises and whether the terms of the agreement were fully carried out, are germane for determining the benami character. Simply because the assessee....
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....ng to the conclusion that the firm is benami. Excise duty was paid on the assessable value which included the amount of discount. Under section 4 of the Central Excises and Salt Act, 1944, the duty of excise is chargeable with reference to the value which is the normal price of the goods, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade. So far the purposes of excise duty, the assessee could not take up the plea that the selling price was minus the discount. The selling price is the price which the goods if sold in wholesale trade, would normally fetch. For determining the benami character of the selling agent, assessable value taken by the Excise Department, to m....
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....ch bill is said to be of Rs. 26. There is no finding that the business of the selling agent which is, undoubtedly of a very high magnitude cannot be carried out without a phone that the selling agent did not have its own phone and that the selling agent depended on the phone of the assessee for the entire business. No doubt, the selling agent who claims itself to be an independent and distinct from the assessee, cannot ordinarily use the phone belonging to the assessee in connection with its business. Even if a phone belonging to the assessee is put at the disposal of the selling agent, then the agreement should indicate as to on what terms and conditions, such phone was allowed to be used by the selling agent. But the finding of the Assist....