RELIABLE CONSTRUCTION CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) SINCE , the issue involved in both the matters is common, they are heard together and disposed of by this common judgment.

(2.) ITR No. 67 of 1993 is preferred by the assessee, challenging the order of the learned ITAT, Ahmedabad Bench (for short, 'the Tribunal'), rendered in ITA No. 955/Ahd/1989 for the A.Y. 1985 -86 and ITA No. 2980/Ahd/1990 for the A.Y. 1986 -87, whereby, the Tribunal partly allowed the appeals filed by the assessee.

(3.) THE brief facts of the case, so far as ITR No.67 of 1993 is concerned, are that the assessee, which was consisting six partners during the relevant financial year, had one Shri. J.M. Doshi as one of its partners. Shri. Doshi was proprietor of two concerns, namely (1) Saurashtra Metal Supplying Company and (2) Jayant Trading Corporation. As the proprietor of the aforesaid firms, Shri. Doshi supplied financial assistance to the assessee, herein, and towards the same, the assessee, herein, paid a total sum of Rs.2,93,053/ - at the rate of 18 per cent per annum to Shri. Doshi towards 'commission'. The AO, during the relevant year, held that such payments made by the assessee were to its partner, i.e. Mr. Doshi, and hence, it cannot be allowed in view of the provisions of Section 40(b) of the Income Tax Act, 1961 (for short, 'the Act') and disallowed the same. The assessee, hence, preferred ITA No. 955/Ahd/1989 before the CIT(A).