TaxTMI 
TaxTMI 
2014 (3) TMI 393
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....ent years 1989- 90 and 1990-91. 2. Since a common question of law is involved in both these appeals and these appeals pertain to the same assessee, they have been taken up for adjudication together. However, for convenience and clarity, facts are being taken from appeal No.111 of 1999. 3. The assessee is engaged in supply and maintenance of sophisticated electronics equipment. He filed his return of income tax for the assessment year 1989-90 on 30.10.1989 declaring his income as Rs.24,34,593/- which as per revised return was changed to Rs.20,62,310/-. Pursuant to notice issued under Section 148 of the Income Tax Act, 1961 (for short, the Act) on 31.5.1991, the assessee had filed his revised return on 1.7.1991 finally declaring his inc....
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....mar Gupta not falling within the ambit of Section 40A(2)(b) the disallowance of expenditure by ignoring the provision of Section 2(41) of the Income Tax Act can be legally sustained? iv) Whether on correct interpretation of Sections 2(41) and 40A(2)(b) of Income Tax Act, the disallowance of expenditure on account of commission paid to Sh. Anil Kumar Gupta is legally justified? 8. We have heard counsel for the parties, while going through the paper books. 9. Contention of the assessee is that the income tax authorities had wrongly construed employment of Anil Kumar Gupta to be that of a relative of the assessee and thus the said authorities were wrongly alarmed by the quantum of commission paid to him. It is further claimed that thi....
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....in assessment year 1989-90, had ever been paid to him earlier; (iii) As per statement of Anil Kumar Gupta dated 25.3.1991, his duties were confined to liaison work and to entertain customers in Delhi Branch; and, (iv) There is assertion of Anil Kumar Gupta that he was thinking of resigning from this service but had dropped the idea because the assessee had agreed to pay him commission @ 2.5% on the gross-receipts over and above, his salary and allowances. 12. After going through the explanation furnished by the assessee and statement of Anil Kumar Gupta, the AO had come to the following conclusion: "1) There was no change in the duties of Shri Anil Gupta prior to the agreement and thereafter, and right from 1984 onwards till dat....
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....n to Anil Kumar Gupta was a compulsion to retain his services for improvement of the business. The CIT(A) had come to a finding that the assessee had failed to prove that Anil Kumar Gupta had contributed anything towards the improvement of the business to justify payment of huge commission to him. When the entire matter was re-agitated before the Tribunal, its observations and findings were no different than the ones given by the AO and affirmed by the CIT(A) on this count. The Tribunal had come to a definite finding that it was not on account of being a nephew of the assessee that he was paid such huge commission. It is also clear that it was well within the cognizance of the Tribunal that a nephew was not included in the term 'relativ....
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.... for these assessment years, the Tribunal had rejected the claim of the assessee on this count. 17. Contention of learned counsel for the assessee is that the Court is concerned with actual action taken by the assessee and not the action which the assessee should have taken under the circumstances. It is further urged that it is not permissible in law to bring in suppositions and then to find out whether the claim is allowable or not? Support has been sought from C.I.T. Versus Om Parkash Behl 1981 Income Tax Reports 342 (P&H) and Smt. Radha Devi Mohatta Versus Commissioner of Wealth-Tax, Bombay City-II 1981 Income Tax Reports 229 (Bombay). 18. There is no dispute about the law and there cannot be any. Facts of the case in hand, howeve....