TaxTMI 
TaxTMI 
2006 (2) TMI 117
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....olour paper in jumbo rolls into marketable condition by the process of slitting? 3. Whether the Tribunal had material and was correct in upholding the claim for higher commission payment to associated concerns at 5 per cent, as against 3 per cent, commission paid to other customers and hence the disallowance of 2 per cent, under section 40A(2) by the Assessing Officer was not proper? 4. Whether the Tribunal had material to cancel the addition made on account of undisclosed sales of scrap? 5. Whether the Tribunal was right in holding that proceedings under section 154 could not be initiated as the disallowances made were in respect of the claims considered under section 143(1)(a)? 6. Whether the cancellation of interest under section 234B is proper?" The relevant assessment years are 1989-90 to 1994-95. (i) Question No. 2: It is stated by both counsel that questions Nos. 1 and 2 are interconnected and therefore a request has been made by counsel to deal with question No. 2, first. The counsel brought to our notice that this issue stands covered by a decision of this court reported in India Cine Agencies v. CIT [2003] 261 ITR 491 which held as follows: "On the facts of the pr....
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..... photographic apparatus and goods. Hence, the question is answered in favour of the assessee and against the Revenue. (iii) Question No. 3: It deals with disallowance of a commission under section 40A(2) of the Act. The appellant-company paid the following amounts as sales commission to the concerns in which the directors are interested. (1) M/s. Nippon Enterprises South - partnership firm (at 6% for sale of graphic art film) Rs.17,45,510 (2) M/s. Graphic King -partnership firm (at 6% for sale of graphic art film) Rs.13,19,278 (3) M/s. Print Systems and Products - partnership firm (at 5% for sale of graphic paper) Rs.8,22,813 (4) Other parties (for both products at 2%) Rs.15,84,572 Total Rs.54,72,173 As can be seen from the above, out of Rs. 54,72,173, payment of Rs. 38.87 lakhs was made to the above first three concerns. The Assessing Officer observed that for other assessees' concerns who rendered similar services to the appellant-company, sales commission was provided at 3 per cent, only and hence, he disallowed the balance amount of commission payment to the abovereferred first three concerns. On appeal, the Commissioner o....
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....ur notice that not only the business had gone up for the assessee but also the payment of commission raised by the above three firms did not result in loss of revenue to the Government. What the officer had done was that he had only alleged invoking section 40A(2) and had totally ignored the merits of the assessee against resulting in increased sales by the assessee, further resulting in increased income in the hands of the assessee. He also further brought to our notice that the potential competitors of the assessee-company felt it necessary to market its products through the firms which were established fully and accordingly entered into agreements with the above three firms. The reasonableness of the expenditure for the purpose of business had to be adjudged from the view point of a businessman and not that of the Revenue, even while invoking section 40A(2). The Tribunal had given a finding that the expenditure incurred was reasonable expenses towards its sole selling agency having its own working force and also outlets as agents throughout India, which had undoubtedly resulted in the assessee's gaining business and on a consideration of all the facts it was held that the disall....
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....93, up to the date of the search. The quantity was worked out on the basis of the percentage given by Mr. Gopalakrishnan. However, the assessee did not challenge the quantity to mean that there was no dispute as regards the quantity finally assessed between the Revenue and the assessee. As regards the rate, the Department relying on the statement of Mr. Gopalakrishnan and the statement of Mr. Tippu Sultan adopted the highest rates disregarding the type of the scrap, i.e. edge waste or full coat. The rates adopted by the Department are as under: X-ray scrap at Rs. 120 per kg. Graphic art film scrap at Rs. 110 per kg. Colour paper scrap at Rs. 6 per kg. Accordingly, the Assessing Officer made an addition of Rs. 66,436 to the returned income against the admitted figure by the assessee in a sum of Rs. 25,196. Aggrieved, the assessee filed an appeal to the Commissioner (Appeals), who sustained the addition in a sum of Rs. 41,238. Aggrieved by the order, the assessee filed an appeal to the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal allowed the appeal. We find that the scrap sales made by the assessee were supported by invoices and they find a place in the scrap....
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....assessee filed an appeal before the Tribunal. The Tribunal allowed the appeal and held that the action of the Assessing Officer in disallowing the deductions claimed on all issues was clearly a debatable issue and therefore, the order under section 154 was wrong and bad in law. Learned counsel for the Department supported that the order of the Commissioner of Income-tax (Appeals) was valid in law. Learned counsel for the assessee, submitted that the items proposed for rectification were not issues which could be the subject matter for rectification under section 154. We heard counsel. The legal requirement for making rectification had 17 been listed out in the proviso to section 143(1)(a) and the items which were rectified as aforesaid were totally beyond the jurisdiction for rectification. The three additions, such as disallowances under sections 32AB and 80-I and foreign exchange fluctuation loss were highly debatable issues and there were two opinions possible, and in such situation, it was not possible to rectify by invoking section 154. Further it was also brought to our notice Circular No. 689 dated August 24,1994, reported in [1994] 209 ITR (St.) 75, which held as follows: ....
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....hat levying of interest is mentioned in the order of the assessment. It is not necessary that it should be a speaking order. As in this case, the assessment order contained levy of interest under section 234B of the Act and hence the levy of interest was valid in law. This provision is not appealable because the levy of interest is automatic. Only the Board has given power to reduce or waive the interest. The asses-see has to make petition before the Central Board of Direct Taxes or the Chief Commissioner of Income-tax for the purpose of waiver of interest. By virtue of the power vested in the Board, under section 119(2)(a), the Board has issued a circular for the purpose of waiver and the said circular is reported in [1997] 225 ITR (St.) 101. As per the circular, it had empowered that the Chief Commissioner of Income-tax and the Director General of Income-tax can waive or reduce interest charged under sections 234A, 234B and 234C of the Act. It is for the assessee to make waiver petition before the concerned authority and satisfy the conditions enumerated in the circular for the waiver of interest under section 234B of the Act. Counsel for the assessee relied on the judgment of ....