COMMISSIONER OF INCOME TAX Vs. SIGMA PAINTS LIMITED

JUDGEMENT

(1.) THIS is an application by the Department under s.256(2) of the IT Act, 1961. The question sought to be referred as a question of law is :

(2.) THE proceedings relate to the asst. year 1979 80. The Tribunal has held that the secret commission involved herein is allowable under S. 37 of the IT Act, 1961, following the Tribunal's Special Bench decision in the case of First ITO vs. French Dyes & Chemicals (I.) (P.) Ltd. in Income tax Appeals Nos. 182 to 194 and others (Bom) of 1982 dated July 31, 1984. Shri Patel, learned counsel for the respondent assessee, has invited our attention to the fact that the assessee had appeared as an intervener before the Special Bench of the Tribunal when it was considering the appeals relating to French Dyes & Chemicals (I.) (P.) Ltd. He has further invited our attention to paragraphs 24 to 28 of the judgment in that case to show that the assessee had produced various details and the records maintained by the company relating to the secret commission payments. Vouchers for the amounts received by the sales officer or other responsible persons for the payment of secret commission were available. The details of sales transactions entered into with various mill companies, in respect of which secret commission had to be paid, were available. There was a complete tally between the commission paid and the extent of business done by the mill company. Details were also available of the exact transactions in respect of which the assessee had to pay the secret commission The assessee had given a complete list showing the turnover and the amount of secret commission paid from yearto year. The percentage of secret commission was minimal. The full details of payment on the above basis in respect of several parties were available. They were correlated to the transactions which the assessee had with those persons and the period during which the transactions were entered into. The only missing item was stated to be the names of the particular parties to whom the payments were made. This, the Tribunal held, could not be supplied without detriment to the business of the assessee in the very nature of things. Shri Patel then pointed out that, in paragraph 29 of the judgment, the Special Bench of the Tribunal noted that the position was the same in the case of Indochem Ltd. and that of the assessee.