TaxTMI 
TaxTMI 
2017 (1) TMI 176
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.... commission to the following persons. S.N. Name of the person Amount 1 Shri P.C. Kothari Rs. 21.000/- 2 Smt. Asha Dhadda Rs.29,800/- 3 Smt. Sushila Jain Rs.48.000/- 4 Smt. Sushma Jain Rs.8,500/- 5 Smt. Vimla Kothari Rs.12.000/- Total Rs. 1,19,300 2.1 After examination of the above five persons, the AO came to the conclusion that the claim of the payment of commission was not genuine. Therefore, he disallowed the payment of commission to these persons. The Id. CIT(A) after having discussed the issue in detail in her order had also confirmed the action of the AO.) 3. This Court while admitting the appeal framed the following substantial questions of law vide order dat....
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....300/- was legal for the persons namely Mr. P.C. Kothari Rs. 21,000/-, Smt. Asha Dhadda Rs. 29,800/-, Smt. Sushila Jain Rs. 48,000/-, Smt. Sushma Jain Rs. 8,500/- and Smt. Vimla Kothari Rs. 12,000/-. 5. Hence, for the commission which was paid by account payee, no income tax is payable and therefore both the authorities have committed serious error in disallowing the expenses which are incurred. It has also been contended that it is enough to show that the money is expended, not of necessity and with a view to direct and immediate benefit, but voluntarily and on grounds of commercial expediency and in order to indirectly facilitate the carrying on the business the authorities were bound to look into the point of view of businessman and ca....
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....r purpose with which the particular expense has been incurred. Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of its or his business. Such expenses can be incurred voluntarily and without necessity. If it is incurred for promoting the business and to earn the profits, the assessee can claim the deduction." 6.2 Decision of Madras High Court in Commissioner of Income Tax vs. Madras Refineries Ltd. reported in 266 ITR 170 holding as under:- "The concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in p....
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....of Income Tax vs. Dalmia Cement (B.) Ltd. reported in 254 ITR 377 which was confirmed by the Supreme Court wherein it has been held as under:- "The reasonableness of the expenditure could be gone into only for the purpose of determining whether, in fact, the amount was spent. Once it is established that there was a nexus between the expenditure and the purpose of the business, the Revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the board of directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case." 7. To establish that the challenge to the concurrent finding which are perverse, it is also substantial ques....
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....sons by such authorities is an important safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and minimises arbitrariness in the decision-making process. Another reason which makes it imperative for the quasi-judicial authorities to give reasons is that their orders are not only subject to the right of the aggrieved persons to challenge the same by filing statutory appeal and revision but also by filing writ petition under Article 226 of the Constitution. Such decisions can also be challenged by way of appeal under Article 136 of the Constitution of India. The High Courts have the power to issue writ of certiorari to quash the orders passed by a quasijud....