Law: Income Tax Act, 1961

Section: 37,256

Income tax.......Reference Business expenditure Service charges paid Whether allowable Question of law Indian Income Tax Act, 1961, Ss. 37 & 256. The Supreme Court directed the question whether the Appellate Tribunal was right in directing the Assessing Officer to allow deduction of service charges amounting to Rs.1,82,03,470 or any part thereof in computing the profits of the assessee, to be referred to the High Court in view of the decision of the High Court in CIT v. Balaji Enterprises (1999) 236 ITR 589 (Mad.) calling for a reference on a similar claim for deduction by the assessee for another period. CIT v. Balaji Enterprises (1999) 236 ITR 589 (Mad.) ref. The order of the High Court (R. Jayasimha Babu and Mrs. A. Subbulakshmy, JJ.), dated February 8, 1999, delivered by R. Jayasimha Babu, J was as follows: Though we have a suspicion that all is not well in these transactions, that by itself does not warrant a reference, which involves primarily reassessment of question of facts which have been considered by the Tribunal in great detail and, found against the Revenue. The Tribunal, after looking into the agreement between the assessee and the other persons to whom the payments were made as also the correspondence and others surrounding circumstances, has held that the agreements were genuine and that the payments in fact were made for the services rendered. The Revenue does not dispute the fact that payments were made as the recipients of these payments were…

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