TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 988
X X X X Extracts X X X X
X X X X Extracts X X X X
....o.700 of 2004 admitted for consideration are extracted below and are representative of the questions raised in TC(A) Nos.701, 702 and 719 of 2004. 1. Whether in the facts and circumstances of the case, the Tribunal had enough material to hold and was right in holding that the commission paid to Swastic Corporation Ltd., is a deductible expenditure? 2. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the additional price paid to sister concerns with respect to goods already purchased during the year, without any prior commitment to the same, could be treated as revenue expenditure and deducted?" 3. The questions admitted in TCA.No.830 of 2004, wherein the assessee is M/s.Swastic Chem (P) Limited....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....? 5. We first take up the appeals in TC(A) Nos. 700, 701, 702, 719 and 830/2004 for decision. The assesses are engaged in the trading of dyes and chemicals. Pursuant to search operations in the business and residential premises of one E.K. Lingamurthy (assesee in TCA.No.702 of 2004) on 11.10.1996, assessments were made on E.K.Lingamurthy, L.Parameswari (assessee in TCA.No.700 of 2004), Kasi Chemicals, (assessee in TC(A).No.701 of 2004) Swastic Dye Stuff Corporation (assessee in TC(A) No.719 of 2004) and Swastic Chem (P) Ltd (assessee in TC(A) No.830 of 2004) which are related concerns controlled by the same group of assessees. The issues as well as persons/entities being inter-related, we propose to deal with all appeals by way of a comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he relationship between the parties militated against the claim being bonafide, particularly in the absence of proof of rendition of service by the sales agent. 8. In appeal before the Commissioner of Income Tax (Appeals), the disallowance was reversed with the officer taking the view that the disallowance had been based entirely on conjectures without any positive material being brought on record by the assessing officer to justify the same. The Commissioner notes that Swastic Corporation Limited had been appointed as sales agent for the sake of maintaining uniformity in sale prices and to avoid unnecessary and uneconomical competition between the sister concerns. A decision thus came to be taken by the entities that a bifurcation of duty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to a disallowance that requires the support of positive material. A conclusion of colourability has to be based on hard facts and not on assumptions and presumptions. The fact that the document was not noticed at the time of search cannot be conclusive in leading to an adverse inference against the assessee as the possibility that it escaped the attention of the investigating authorities cannot be ruled out. Then again, the mere fact that the settlement commission had been approached cannot mean that every act of the assessee has to be dubious or colourable, except if supported by collaborative material. In the present case, a plausible explanation has been offered that has found favour with the appellate authorities. 11. There is no pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urable /sham can be arrived at by viewing the transaction in a commercially realistic and wholistic perspective, not adopting a truncated and dissecting approach. In the present case, there is a consistent finding of fact that the transaction was bonafide and acceptable. Nothing is placed before us to indicate that the findings are perverse. We are thus not inclined to interfere with the concurrent findings of the authorities. Substantial question of Law No.1 is answered against the revenue and in favour of the assessee. 14. Substantial question of law No.2 in TC (A) Nos.700, 701, 702 and 719 of 2004 deals with additional price paid to sister concerns with respect to purchases. The conclusion of the tribunal at para 17.12 is in the followi....