1986 (7) TMI 82

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....MA C.J.-This is a reference made under section 256(1) of the Income-tax Act, 1961, at the instance of the assessee to answer the following question of law, namely: " Whether, on the facts and in the circumstances of the case, disallowance of commission given by the assessee on sale bills themselves is permissible under section 40A(2)(a)? " The assessee is a partnership firm comprising of thr....

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....ducated nor trained to carry on the business, the provision of section 40A(2)(a) of the Income-tax Act was attracted and, therefore, the deduction claimed could not be allowed. In short, it was held that the commission which was claimed as business expenditure did not satisfy the test of commercial expediency and it could not be allowed as a permissible deduction. The Commissioner of Income-tax (A....

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....ng regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. " Admittedly, the expenditure is alleged to ha....

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....unreasonable having regard to the circumstances specified in section 40A(2)(a). In other words, the finding clearly indicates that there was no commercial expediency attaching to the disallowed expense for the detailed reasons which are given by the Tribunal in its order. On this finding of fact, the conclusion reached by the Tribunal cannot be assailed. Learned counsel for the assessee placed ....