Law:

Section:

Section 256(2) of the income-tax act, 1961-Reference-Question of fact-Assessee-Contractor supplied goods to military through sub-Contractors charging commission from them-For relevant assessment year, assessee disclosed no income from commission claiming that sub-Contractors having suffered losses, it had foregone commission-Tribunal found assessee had not foregone commission by end of relevant accounting period and had not established commercial expediency of giving it up-Whether tribunal rightly held that commission was assessable in assessee's hands-Answer declined, as point involved was a question of fact and no question of law arose from tribunal's order Facts The assessee had taken contract from military authorities for making certain supplies and it got the work executed through certain subcontractors, who were to pay certain commission to the assessee. For the assessment years 1967-68 and 1968-69, the assessee did not disclose any income from commission from the sub-contractors on the ground that as the subcontractors had suffered heavy losses, it had agreed to forego the commission, which amounted to Rs. 1,60,806 and Rs. 6,290, respectively, for the two years. The ITO's finding that no portion of the commission had been foregone by the assessee up to the end of the relevant accounting periods, added the amount of the commission to the assessee's taxable income on accrual basis. On appeal, the AAC upheld the ITO's order. On second appeal, the Tribunal observed that the right to receive the commission from the sub-contractors was acquired by the assessee as soon as the billed amount was received from the military authorities by the assessee. Further, having found (i) that at the close of the relevant accounting periods the assessee had not forgone the amount of commission due to it ; and (ii) that the assessee had failed to establish that the commission was given up on account of business or commercial expediency, the Tribunal held that the question of assessee surrendering the amount of commission as at the close of the relevant accounting period did not arise. Accordingly, it upheld the AAC's order. On reference : Held The question whether the…

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