2011 (12) TMI 783

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Before taking note of the questions framed by the Revenue in these appeals, brief facts may be recorded. Respondent-assessee is a company registered under the Companies Act and is engaged in the business of manufacturing maze products. For the year under consideration i.e. previous year to the relevant assessment year 1992-93, the assessee had claimed deduction of an amount of Rs.1.27 crores (rounded off) towards commission paid to the sole selling agent. The Assessing Officer disallowed the entire claim holding that the said sole selling agent had not rendered any service. The commission paid, therefore, could not be claimed deduction of. The assessee carried the order of the Assessing Officer in appeal. CIT(Appeals), allowed substa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e opinion that such terms and conditions were not followed. Certain purchases were made by the parties directly from the assessee. For the delay in making the payments, no penalty was levied from LGDA though the agreement provided so. He also noted that LGDA was not authorized to negotiate the price with the purchasers. However, one Shri Vinodbhai Soni who was an employee of LGDA had done so. With respect to eight individual companies, he recorded the statement of representatives of such purchasers, who stated that LGDA had not contributed to the sale made by such purchasers from the assessee. According to the Assessing Officer, the cumulative effect of such factors would be that entire commission paid to LGDA was required to be disallowed.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ssessee correctly points out that in the earlier years, the Tribunal had accepted such arrangement and in fact, the High Court had confirmed the view of the Tribunal. Additionally, we also notice that the assessee had large number of customers. In fact, it was pointed out before the Revenue authorities as well as the Tribunal that the assessee had more than 2000 customers. The Assessing Officer had examined only eight of them and found that direct purchases were made. It was on this basis that the Tribunal upheld the arrangement even with respect to such eight parties believing that the assessee might have interacted directly with a handful of customers for very many reasons. Additionally we also find that the assessee had brought to the....