BOMBAY MOTORS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE two IT reference applications have been submitted in respect of the asst. yrs. 1971 72 and 1972 73 and are being disposed of by this common order as the questions raised therein are common and the Tribunal has referred the following questions of law arising out of its order dt. 31st Dec., 1975. The questions were referred in accordance with the directions given by this Court under S. 256(2) of the IT Act, 1961 :

(2.) THE brief facts of the case are that the assessee is a partnership firm carrying on the business of trade in automobiles and their parts. A deduction of Rs. 9,362 was claimed as commission paid to Shri Gopaldas by the assessee at the rate of 5% on the sale of automobile accessories and parts. Gopal Das was examined by the ITO on 14th June, 1973, and 18th July, 1973. He was working since 1967. The ITO found that no commission was paid to him or any other person since 1967. Gopal Das failed to name any person or any department to whom the sales were effected. The ITO, therefore, came to the conclusion that Gopal Das never met either any official in any department or any sales was effected through him and the case of the assessee that he paid commission to Shri Gopal Das is completely false and fabricated. The ITO was, therefore, of the view that the claim of commission paid to Gopal Das is bogus and his name has been utilised as a helpless employee besides being a distinct relation. The commission so paid was disallowed. In appeal, the AAC found that the payment of commission was genuine and the ITO was not justified in making addition of it. The Revenue challenged this matter before the Tribunal who examined the matter in detail and found that there is no evidence on record to show that Gopal Das rendered any extra services and for which services which he rendered he was being paid remuneration by way of salary. On this finding that Gopal Das has not rendered any extra service for which extra payment is alleged to have been made, it was found that it is of no legal consequence that the payment of commission has been disbursed to him. The Tribunal has referred to the decision in the case of Shahzada Nand & Sons vs. CIT (1973) 90 ITR 91 (P&H). The assessee thereafter made a miscellaneous application on the ground that the said decision has been overruled by the apex Court in the case of Shahzada Nand & Sons vs. CIT 1977 CTR (SC) 246 : (1977) 108 ITR 358 (SC) : TC 15R.630. The application was disposed of only by deleting the sentence mentioning the name of Shahzada Nand & Sons without affecting the merits of the decision given in appeal.

(3.) WE have considered over the matter. In the case of Shahzada Nand and Sons vs. CIT (supra) while interpreting S. 36(1)(ii), it was observed :