1999 (3) TMI 54

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....expenditure under section 37 of the Income-tax Act, 1961 ?" This reference pertains to the assessment years 1979-80 and 1980-81. In the above assessment years, the assessee-company claimed to have paid secret commission of Rs. 1,31,209 and Rs. 1,22,407, respectively, allegedly, for the purpose of securing business. Since the assessee had not filed the relevant evidence regarding payment of commission, the Income-tax Officer did not allow the claim of the assessee for deduction of the above amount under section 37(1) of the Act in the computation of its income. The assessee preferred an appeal to the Commissioner of Income-tax (Appeals) who accepted the claim of the assessee for deduction of secret commission and allowed the appeal of the....

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....f the above Explanation with retrospective effect from April 1, 1962, in order to claim deduction under section 37(1), the assessee has to show that the amount paid allegedly as secret commission has been paid for any purpose which is not an offence or which is not prohibited by law. Mr. Desai submits that as the Explanation was inserted by the Finance (No. 2) Act, 1998, with retrospective effect from the date of coming into force of the Income-tax Act, 1961, i.e., April 1, 1962, the income-tax authorities, including the Tribunal, had no occasion to examine the claim of the assessee for deduction of secret commission from this angle. He submits that in view of the above, this is a fit case where the matter should be remitted back to the Tri....