1988 (10) TMI 7

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....to hold that the sum of Rs. 6,80,850 paid to six parties as commission was expended exclusively for the purpose of the business and was thus an allowable deduction under section 37(1) of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal had erred in ignoring the material evidence on record, collected by the Income-tax Officer during the course of the assessment proceedings, in coming to the conclusion that the commission payments made by the assessee to six parties represented genuine payment to these parties ? 3. Whether, on the facts and in the circumstances of the case, the finding of the Income-tax Appellate Tribunal that the six parties had rendered services for ....

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....to the conclusion that the commission paid to each of the six parties was genuine and that the expenditure had been laid out wholly and exclusively for the purpose of the business. Consequently, the Commissioner of Income-tax moved an application under section 256(1) of the Income-tax Act for referring the above mentioned questions for the opinion of this court. On January 13, 1982, the Income-tax Appellate Tribunal rejected the reference application as it was of the view that the conclusion of the Tribunal regarding the genuineness of the commission payments was arrived at after appraisal of the entire evidence and material on record and they were essentially findings of fact not giving rise to an interpretation of any legal principles.....

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....ral argument of the parties and has examined the correspondence exchanged between the assessee and the commission agents. It has noticed that the payments were made by account payee cheques and drafts which were cleared through banks. It has also noticed that the total amount of deduction claimed as commission was Rs. 10,17,288 and the Income-tax Officer doubted the genuineness of only Rs. 6,80,850. Dealing with the commission paid to Messrs. Emjay Trading Co., an income-tax assessee, the Tribunal held that the genuineness of the payment could not be doubted as it was clearly proved that it had been paid and had been included by the payee in its profit and loss account. The Tribunal rejected the observations "that since public sector ....