Law:

Section:

Section 256, read with section 37(1), of the Income-tax Act, 1961 - Reference - Question of law - ITO disallowed certain payments made by assessee to field organisers without holding that no services were rendered by them - Tribunal allowed assessee's claim - It was not clear from record whether records were produced before lower authorities and examined by them - Whether matter required to be looked into and, therefore, Tribunal should state a case - Held, yes Facts The ITO disallowed certain payments made by the assessee to field, organisers on the ground that the assessee's sole selling agency had been abolished by the Government. The Commissioner (Appeals) as well as the Tribunal proceeded on the simple basis that the ITO had not doubted that services had been rendered, and allowed the assessee's claim. On an application under section 256(2) by the revenue: Held There was positive material to show that the field organisers did render services. The ITO did not give a categorical finding that these field organisers had not rendered any services. But he did come to the conclusion that these field organisers had been appointed by the assessee by way of a mask or facade to get over the abolition of the sole selling agency by the Government. The Commissioner did not appear to have applied his mind to the material available, if any, to show that services were rendered. The matter needed to be looked into in greater detail and possibly it could be elucidated by the Tribunal at the stage of submitting a statement of the case. The Tribunal could at the request of the assessee forward to the Court the material which was placed by him before the ITO as well as before it on the basis of which the assessee sought to contend that services had been rendered by these field organisers. Accordingly, the Tribunal was directed to state a case. Case referred to Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC). K.K. Wadera and R.C. Pandey for the Applicant. Harihar Lal for the Respondent. ORDER 1. Four questions have been suggested on behalf of the Commissioner. So far as question No. 1 is concerned, we reject the application following our order in income-tax Case No.…

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