AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 869
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision at Dalmiapuram ii) Dalmia Magnesite Corporation at Salem iii) Dalmia International at Hospet iv) Govan Travels with Head Officer at New Delhi v) Dalmia Electronics Corporation at Ballabhgarh" 2. The questions of law referred by the Tribunal to this Court for opinion are as follows : "(1) Whether on facts and in circumstances of the case the Tribunal was correct in law in holding that in appointing the field organizers, there was no infraction of law regarding establishment of sole selling agency system and thereby deleting the addition of Rs. 27,48,773/- paid to the field organizers? (2) Whether on facts and in circ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the brief facts are as follows. In the course of the assessment proceedings, it was noticed by the assessing officer that an amount of Rs. 27,48,773/- was claimed in the return as remuneration to field organizers/sales organizers. When asked to justify the claim the assessee submitted that the field organizers were appointed for the purpose of sale of non-levy cement for which they were allowed commission for services rendered by them on the basis of agreements (with them). The assessing officer, on the ground that similar expenditure was not allowed in the earlier years, disallowed the claim. On appeal, the CIT(Appeals) noticed that the sale of cement was decontrolled by the Government on 27.2.1982 and thereafter the field agents/sales org....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder agreements entered into with them. This was after the sale of cement was decontrolled. The assessing officer has neither doubted the genuineness of the payments nor held that the field organizers did not render any services as per the agreements. If these facts are not disputed, it follows that the expenditure was rightly allowed by the CIT (Appeals) as business expenditure and his decision was rightly affirmed by the Tribunal. The sales/field organizers were many in number and were appointed from all over the country as the details given in the order of the CIT (Appeals) would show. They were spread over Madras, Tiruchi, Salem and Tuticorin in Tamilnadu, Bangalore and Maharashtra. They cannot be called sole-selling agents within the m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat fixed deposits to the extent of Rs. 1.5 crores were secured by a floating charge and therefore, the interest paid on them was not considered for disallowance. The assessing officer, relying on the earlier assessments, held that 15% of the interest of Rs. 39,61,260/- paid on the fixed deposits of Rs. 1.5 crores should also be disallowed. He accordingly, disallowed Rs. 5,94,189/-. On appeal, the CIT(Appeals) found that the fixed deposits amounting to Rs. 1.5 crores were secured by a floating charge on specific assets of the company and that the fixed deposits should therefore be considered as secured deposits, falling outside Section 40A(8). He accordingly, deleted the disallowance. On appeal by the revenue to the Tribunal the decision of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....people were employed, whose sentiments were respected by building a temple so that they can offer worship which was one of the important aspects of their lives. This, according to the CIT(Appeals), kept the workers happy and contented, which is very important for the smooth functioning of the company. On these findings, the CIT(Appeals) allowed the expenditure as business expenditure and his decision was affirmed by the Tribunal. 9. In our opinion, the Tribunal has taken the correct view having regard to the inclusive nature of the expression "for the purpose of the business" appearing in Section 37(1) of the Act and as explained by the Supreme Court in the case of CIT v. Malayalam Plantations Ltd. (1964) 53 ITR 140. We accordingly answer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e have considered the matter and we find that having regard to the finding of fact, not challenged before us, that the retairnership paid to Hariharlal, Advocate was not in connection with income tax proceedings but for general advice relating to other laws, the provisions of Section 80VV of the Act are not attracted. The Section as it stood at the relevant time was applicable only in respect of the expenditure incurred in pursuing income tax assessment proceedings or proceedings before the authorities under the Act. It did not apply to retainership fees paid to consultants or advocates. In this view of the matter we answer the question of law in the affirmative, in favour of the assessee and against the revenue. 12. Questions No.5 and 6 c....