2003 (7) TMI 36

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...., the order of the Tribunal involves the following substantial questions of law: "1. Whether the order of the Income-tax Appellate Tribunal dismissing the appeal of the Revenue is perverse and contrary to the relevant material on record and passed without considering the reasoning and basis given by the Assessing Officer disallowing expenditure of Rs. 53,400 allegedly paid as salary to the wives of the two directors? 2. Whether the Income-tax Appellate Tribunal was right in dismissing the appeal of the Revenue against deletion of Rs. 53,400 allegedly paid as salary to the wives of two directors though the principle of res judicata is not applicable to income tax proceedings? 3. Whether the order of the Income-tax Appellate Tribunal....

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....isallowed the said expenditure holding that it could not be regarded as business expenditure, wholly and exclusively expended for the purpose of the assessee's business. Accordingly, he made an addition of Rs. 53,400/- on this account. The Assessing Officer also disallowed the sum of Rs. 3,27,767/- as unproved purchases on account of coal, furnace oil and oil lubricants. Aggrieved, the assessee preferred appeal to the Commissioner of Income tax (Appeals), who deleted both the additions. As regards the disallowance of the salaries paid to the two ladies,' the Commissioner observed that the rate of salary to each of them worked out to Rs. 2,225 per month, which was less than what was normally paid to an assistant. Taking note of the fact t....

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.... Assessing Officer. Even the supporting documents such as entry passes, octroi receipts were verified by the Inspector deputed by the Assessing Officer as well as the Commissioner and both of them had not found any fault in this behalf. The Tribunal also noticed the handicap of the assessee in producing the parties after a gap of almost five years from the date of the transaction. Hence, the present appeal. We have heard Mr. Sanjiv Khanna, learned senior standing counsel for the Revenue. It is strenuously urged by Mr. Khanna that since the assessee had failed to furnish satisfactory evidence for the services rendered by the ladies as also in respect of its claim for purchases, both the appellate authorities below were not legally corr....

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....ase is substantial question or not. It was said that the proper test would be whether:(i) it is of general public importance; or (ii) it directly or substantially affects the rights of the parties; or (iii) it is an open question in the sense that it is not finally settled by the Supreme Court; or (iv) is not free from difficulty; and (v) it calls for discussion for alternative views. These five tests were culled out in Bhagat Construction Co. (P) Ltd. v. CIT [2001] 250 ITR 291 (Delhi), to which decision one of us (D.K. Jain J.) was a party. In the same decision the following tests were laid down to determine whether the question involved is one of fact or law: "(1) As the Tribunal is a final fact-finding authority, if it has reached ....