TaxTMI 
TaxTMI 
1972 (8) TMI 2
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....gh Court for its opinion proceeds on the basis that the facts and circumstances of the case as found by the Tribunal are not in dispute but what is disputed is the legal effect of the facts and circumstances found by the Tribunal. As held by this court in the earlier decisions that when a question refers to the facts and circumstances in the case, it means the facts and circumstances as found by the Tribunal. If any party wants to challenge the correctness of the findings given by the Tribunal either on the ground that the same is not supported by any evidence on record or is based on irrelevant or inadmissible evidence or is unreasonable or perverse, a question raising any one of those grounds must be sought for and obtained. It is needless to say that the jurisdiction of the High Court in a reference under section 66 is only an advisory jurisdiction. That being so it can only pronounce its opinion on the questions referred to it. It is trite to say that it cannot sit as an appellate court over the decision of the Tribunal. Bearing these facts in mind, let us now proceed to set out the facts as found by the Tribunal. The controversy in this case relates to the assessment of the ....
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....parties may by mutual consent agree to continue after the expiry of the 31st day of March, 1955, on the same terms and conditions as are herein contained or any modification thereof as they may decide in which case the agency business shall be terminated by either party giving to the other not less than three months' notice in writing sent by registered post and such notice shall be deemed to have been given seven days after the same has been posted. 15. Notwithstanding anything contained in any of the foregoing clauses if the agents shall fail to make any payments as herein provided or commit any breach of any covenant herein contained and on the part of the agents to be observed and performed the principal shall have right at any time to terminate this agreement by giving to the agents one month's notice in respect thereof." In the relevant year of account, the assessee paid to Messrs. J. K. Alloys Ltd. Rs. 1,56,806 as selling agency commission in accordance with the terms of the agreement. The Income-tax Officer disallowed the claim for deduction of that amount on the ground that the payment had not been made on business considerations. On appeal, the Appellate Assistant Com....
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....t the principal's works or godown. Such payment had to be made on presentation of necessary papers or documents by the assessee, not later than a fortnight after the date the goods were despatched. In default of payment as aforesaid, the assessee was entitled to charge interest until realisation at the rate of six per cent. per annum on the balance for the time being outstanding. Under clause (9) of the agreement, the agents were also responsible for due fulfilment of all contracts made by them whether for ready or forward sales and also for the consequences of any breach of contract by any customer and for all losses and damages arising therefrom to the assessee provided there was no default on the part of the assessee in manufacturing or giving delivery of any goods required or sold under any contract in compliance with the terms of the agreement. The Income-tax Officer and the Appellate Assistant Commissioner also overlooked the fact that in the previous years, the commission paid by the assessee to the selling agents had been considered as deductible expenditure. From this it follows that from 1950 to 1954, the agents did function in accordance with the terms of the agreement. ....
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....e test of commercial expediency for determining whether an expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure has to be adjudged from the point of view of the businessman and not of the income-tax department, this court proceeded to observe: " It is, of course, open to the Appellate Tribunal to come to a conclusion either that the alleged payment is not real or that it is not incurred by the assessee in the character of a trader or it is not laid out wholly and exclusively for the purposes of the business of the assessee and to disallow it." In the instant case, it is not the case of the revenue that the assessee did not pay the commission in question nor is it its case that the expenditure in question was not incurred by the assessee in the character of a trader. Therefore the only question that remains to be considered is whether it was not expended wholly or exclusively for the purpose of the business of the assessee. The Tribunal after taking into consideration the various terms if the agreement as well as the significance of the deduction given in the earlier assessment years came to the conclusion that the In....