1985 (3) TMI 24

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....was deductible ?  (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the disallowance made by the Income-tax Officer under the head 'Commission paid by the assessee-company' to its directors and in not considering the applicability of section 40(c) of the Income-tax Act, 1961 ? " These two tax cases relate to the assessment year 1970-71. While assessing, the Income-tax Officer rejected the claim of the assessee of Rs. 4,94,303 claimed to have been incurred in the repairs and renovation of the furnace. The assessee claimed it to be a revenue expenditure whereas the Department asserted that it was capital in nature. The next matter which fell for consideration before the Income-t....

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....nst the Revenue. That leaves us with the second question referred to us. The question is whether commission paid to the directors could have been allowed or not. The Income-tax Officer has rejected the claim and so has the Appellate Assistant Commissioner. The Appellate Assistant Commissioner in agreement with the Income-tax Officer had held that the perquisites, i.e., commission paid to the directors, were not salaries but benefit. The Appellate Assistant Commissioner also held in agreement with the Income-tax Officer that the company was more or less a family concern and the directors had substantial, if not decisive, voice in fixing their own remuneration. The Tribunal did not go into the questions of fact. It only applied itsel....

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....where remand involves investigation into new aspects or other sources of allowance, remand should not be resorted to. But where new sources do not fall for consideration, the Tribunal must be held to be fully empowered either to remand it or to go into the question itself. In our view, therefore, the Tribunal was not justified in refusing to adjudicate the claim of the assessee. It should have either considered the question itself or should have remanded the matter to the Income-tax Officer. In that view of the matter, we are definitely of the view that the Tribunal was not justified in deleting the disallowance made by the Income-tax Officer without considering the applicability of section 40(c) of the Act. The matter must, therefore, be r....