Law: Income Tax Act, 1961

Section: 256,37

Income-tax----Reference---Question of law---Business expenditure---Secret commission-¬Appellate Tribunal---Finding that assessee failed to establish that expenditure was incurred---No question of law arises---Indian Income Tax Act, 1961, Ss. 37 & 256. The appellant, a private company engaged in the manufacture of chemicals and dyes, had claimed deduction of the sum of Rs.16,831 as having been paid as secret commission to dyeing masters, purchase officers and other workers in the textile mills to which the appellant supplied dyes and chemicals. The Appellate Tribunal found as a fact that the appellant had failed to establish that the amount was expended by it for the purpose indicated by it because of the following circumstances, viz., (i) the appellant failed to disclose the names of the recipients; (ii) the commission alleged to have been paid was not uniform: Held, that since the appellant had not questioned the finding of fact that it had failed to establish that the expenditure claimed was in fact incurred, no question of law arose out of the order of the Tribunal. JUDGMENT This appeal is preferred by the assessee against an order of the Bombay High Court refusing to direct the Tribunal to state the following question of law under section 256(2) of the Income Tax Act, 1961: "(1) Whether, on the facts and in the circumstances of the case, the assessee-company's claim under section 37 for deduction of Rs.16,831 paid to the director for payment of commission to dyeing masters, purchase officers and others working in different textile mills to whom the assessee company supplied dyes and chemicals could be disallowed in determining the profits for the assessment year 1973-74? (2) Whether the Tribunal was right in allowing Revenue authorities to raise for the first time the plea that the secret commission expenditure was not incurred for the purpose of the assessee-company's business? (3)Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no evidence that there was any practice of payment of secret commission to dyeing masters, purchase officers, etc., when in fact the Tribunal had accepted in…

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