COMMISSIONER OF INCOME TAX Vs. BHARAT MEDICAL STORE

JUDGEMENT

(1.) AT the instance of the Revenue the Tribunal, Amritsar Bench, Amritsar (for brevity, "the Tribunal"), has referred the following question of law for determination of this Court by exercising jurisdiction under s. 256(1) of the IT Act, 1961 (Asr)/1991, in respect of the asst. yr. 1988 -89 :

(2.) BRIEF facts may first be noticed. The assessee respondent filed its return of income for the asst. yr. 1988 -89 claiming allowance on commission paid by it to various agents who are stated to be relatives/friends of the partners of the assessee firm. The commission amounted to Rs. 7,30,939. The AO disallowed the claim with the observation that the payment of commission was devised by the assessee -firm to reduce the tax liability. He also held that the commission was paid to close relations and friends of the partners of the assessee -firm.

(3.) ON appeal before the CIT(A), it was held that although there was no documentary evidence regarding service being done, the assessee -firm could not procure business without making payment of the commission. Accordingly, the CIT(A) allowed the commission of Rs. 2,82,957 and sustained the addition to the extent of Rs. 4,44,979.