Law: Income Tax Act, 1961

Section: 256,256(2)

(a) Income-tax-----Reference---Question of law---Capital or revenue expenditure ---Assessee deriving income from export of spare parts and commission from Indian and foreign authorities---Deduction claimed on account of commission paid to G---Tribunal finding that G had helped assessee in obtaining better price and commission paid to G in accordance with memorandum of understanding reached between assessee and G---Assessee receiving repeated orders for supply of detergent but no commission paid to G on that account or in respect of every contract---Both assessee and G free to compete with each other---Tribunal finding that expenditure by way of commission to ward off competition in individual transaction and leaving competitor surviving in field is only revenue expenditure---Finding of Tribunal is finding of fact---No question of law arises for reference---Indian Income Tax Act, 1961, S.256(2). (b) Income-tax--- ----Reference---Question of law---Business expenditure---Assessee receiving commission for sale of textile machinery imported from USSR against which assessee paying commission to A---A introducing assessee to P mills which was purchasing textile machinery on assessees persuasion---P mills purchasing machinery from USSR---Tribunal finding exchange of regular correspondence between assessee and A showing role played by A in securing orders to assessee---A confirming receipt of commission from assessee and payment made to A by account payee cheques or drafts---Bank confirming transactions between assessee and A on inquiries from revenue---Commission paid to A only, one-fifth of total commission receipts of assessee---A was an independent entity and was filing Income Tax Returns---Tribunal deleting disallowance of commission -paid to A---Finding of Tribunal finding of fact and no question of law arises for reference---Indian Income Tax Act, 1961, S. 256(2). It is well-settled that whether an expenditure was incurred or not, is a question falling within the domain of facts. Whether such expenditure is allowable as a deduction or not and how the nature of such expenditure is to be classified under the relevant legal provision is a question of law. The…

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