VISHWANATH SETH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has referred the following two questions for the opinion of this court:

(2.) THE assessee, a registered firm, was carrying on business of sarrafa and cold storage. It filed its return for the assessment year 1968-69 showing a loss of Rs. 26,765. THE ITO found on scrutiny of the accounts that a sum of Rs. 14,036 had been debited in the accounts by way of sales tax but that liability did not pertain to the assessment year in question. Apart from this, under the head " Remuneration and salary", the assessee debited an amount of Rs. 38,050 as remuneration and Rs. 7,000 as salary to its 4 employees which was based on the percentage of the profit. THE ITO disallowed the claim for deduction of sales tax on the ground that it did not pertain to the relevant assessment year. So far as the deduction of remuneration is concerned, that was disallowed as the ITO held that the remuneration paid was excessive, considering the fact that these employees were being paid handsome amounts by way of salary. On appeal, the AAC allowed deduction in respect of remuneration at an amount of Rs. 12,050 with the result that the addition under this head was scaled down to Rs. 26,000 only. So far as the claim for deduction of sales tax is concerned, the order of the ITO disallowing it was upheld. Both the assessee and the revenue filed appeals which failed as respects these points.

(3.) WE accordingly answer both the questions in the affirmative, in favour of the department and against the assessee. The department is entitled to its costs which are assessed at Rs. 200. Counsel's fee is assessed at the same figure.