Law:

Section:

Section 37(1) of the Income-tax Act, 1961 (Corresponding to section 10(2)(xv) of the Indian Income-tax Act, 1922) - Business expenditure - Allowability of - Assessment year 1959-60 - Assessee-company claimed deduction of commission on sales paid to its manager to reimburse him in regard to expenditure on entertainment, presents and commission to diverse customers of company in interest of company's business - Expenditure was disallowed in absence of evidence - Whether since there was finding of fact that assessee-company had failed to discharge burden that amount which was purported to have been paid to manager had been expended for entertainment, presents, claim for deduction made by company was to be disallowed - Held, yes FACTS The assessee was a private limited company doing business in which 'A' was working as the manager, he addressed a letter to the chairman of the assessee-company requesting him to sanction commission on sales at the rate of 2½ per cent which, according to him, was what he was required to disburse in one form or another in the interest of the company's business. The board of directors at their meeting, passed a resolution sanctioning payment of commission at the rate of 2½ per cent on sales to 'A' with a view to reimburse him in regard to expenditure on account of entertainment, presents and commission to diverse customers of the company in the interest of the company's business. An agreement was entered into between the company and 'A' according to which the company agreed to pay commission at the aforesaid rate on sales beginning with the year 1958 till the termination of the agreement. In the assessment proceedings the assessee-company claimed the said expenditure on account of payment to 'A' as allowable deduction in ascertaining its profits as also on the ground that the said expenditure had been wholly and exclusively laid out for the purpose of business of the company. The ITO disallowed the whole of the commission in the company's assessment; he took the view that the assessee-company had parted with the amount with the oblique purpose of reducing the profit of the assessee-company. He found that as compared to the monthly…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492