1999 (7) TMI 42

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....e under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the commission of Rs. 1,24,969 paid by the assessee to Parekh and Co., would fall to be considered under section 40A(5), or section 40(c), a....

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....as salary to Shri Pradeep Shah. It had also paid commission of Rs. 1,24,969 to Parekh and Co. The Income-tax Officer applied section 40A(5) of the Income-tax Act for finding out the allowable salary. Following the earlier orders of the Income-tax Appellate Tribunal in the case of the assessee for the years 1975-76 to 1977-78, in appeal the Commissioner of Income-tax (Appeals) held that the amount ....

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....ibunal was of the view that it was not a fit case for remitting the matter to the authorities below for being processed under section 40(c) of the Income-tax Act. The Income-tax Appellate Tribunal held that there is prima facie evidence to show that the commission paid is not excessive or unreasonable having regard to the business of the assessee. In this view of the matter, the Income-tax Appella....

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....ration of a valuable right parted with by the firm/partners/directors of the assessee-company in favour of the assessee. So long as the agreement whereunder the said payments were made is not held to be a mere device or a mere screen, the said payments cannot be treated as payments made to the directors as directors (qua directors). The payments were made by way of consideration for allowing the a....