C I T DELHI Vs. VISHWANATH SHARMA

JUDGEMENT

(1.) In this Income Tax Reference, we are re quired to answer the following question: "whether on the facts and in the circumstances of the case, the learned I. T. A. T. was justified and correct in law in holding the expenditure on account of commission paid to Government Doctors incurred by the assessee in con travention of the Public Policy, as allowable expenditure. "

(2.) THE assessee is dealing in Ayurvedic medicines. For the assessment year 1989-1990, he claims that he spent Rs. 2,46,254 as business expenditure by paying commission to various Doctors at the rate of 25 who were prescribing his -medicines to the patients. THE said Doctors/vaids were both private as well as Government Doctors. THE Assessing Officer disallowed the aforesaid amount as business expenditure, but Commissioner, Income Tax (Appeal) allowed payment made to private Doctors/vaids but disallowed a sum of Rs. 1,08,678 as busi ness expenditure claimed to have been paid to Government Doctors. THE asses see claimed that payment of said commission was a business necessity and was followed by him over the years. THE Tribunal upheld the contention of asses see with respect to claim of Rs. 1,08,678 to be treated as business expenditure observing that the payment was not disputed by the Revenue, and since it was evident that such amount was paid over the years, it was a business necessity and was allowable as business expenditure.

(3.) HAVING heard learned Counsel for the parties and considering the record as well as the various authorities cited at the bar, we are of the view that the sum of Rs. 1,08,678 paid as commission to Government Doctors/vaids cannot be al lowed as business expenditure under the Act and, therefore, the question has to be answered in favour of the Revenue and against the assessee. Our reasons for such conclusion are as under: