COMMISSIONER OF INCOME TAX Vs. ASSOCIATED ELECTRICAL AGENCIES

JUDGEMENT

(1.) The assessment year is 1992-93. The questions referred to us for consideration are:-

(2.) Whether on the facts and in the circumstances of the case and having regard to the Supreme Court's decision in the case of Mc Dowell & Co. Ltd. (154 ITR 148) the Appellate Tribunal was right in law in failing to appreciate that the expenditure claimed by the assessee was only a device to avoid tax on income earned by the assessee

(3.) The two assessees are agents of a company Dynavision (hereinafter referred to as 'the company'), which manufactured television sets. According to the assessees, 70 per cent of the production of that company was marketed through them. The company was promoted by persons whose relatives are partners in the two assessee firms. However, the majority of the shares in that company are not held by those promoters. Substantial part is held by the public sector companies and a large part by private shareholders, and about 26% by the promoters. The managing Director of the company belongs to the promoters group. Several officers of the State Government are on the Board of this Company.