SUJAN SINGH SADANA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Amritsar Bench, on the applications filed by M/s. Sujan Singh Sadana under Section 256 (1) of the I. T. Act, 1961 (hereinafter referred to as "the Act"), has referred the following question of law for our decision :

(2.) M/s. Sujan Singh Sadana (hereinafter to be referred as "the assessee") carries on business in money-lending and military contracts. The assessee had taken contract from the military authorities for the supply of meat, fresh buffalo milk, vegetables, charcoal and other things. The assessee did not work these contracts itself but, as in the past, the work was got executed through Sub-contractors. During the assessment year 1967-68, relevant to the accounting period ending 31st March, 1967, and 1968-69, relevant to the accounting period ending 31st March, 1968, the assessee got military supplies executed through three Sub-contractors, namely, M/s. Akash Corporation, M/s. Khanoo Ram and Co. , and M/s. Friends and Co. The above-named Sub-contractors, employed by the assessee, supplied goods to the military authorities on behalf of the assessee under the terms and conditions of the agreement entered into by the assessee with these Sub-contractors. One of the provisions of the agreement which talks of the commission of the assessee reads as under :

(3.) FOR the assessment years 1967-68 and 1968-69, the assessee did not disclose any income from commission from the abovesaid three subcontractors, on the ground that as the Sub-contractors had suffered heavy losses, it had agreed to forgo the commission of Rs. 1,60,806 due to it from the above-named three Sub-contractors.