Bombay High Court
Commissioner Of Income-Tax vs National Rayon Commercial Co. Ltd. on 7 February, 1984
Equivalent citations: [1985]153ITR733A(BOM)
Author: Sujata V. Manohar
Bench: Sujata V. Manohar
JUDGMENT Kania, J.
1. This is an application for directing the Income-tax Appellate Tribunal to refer to us for determination of the questions set out therein and to state a case for that purpose.
2. The assessment years in question are the assessment years 1973-74, 1974-75 and 1975-76. It is not necessary to set out the questions in detail because the only two questions regarding which the rule has been issued is as to whether the plant and machinery installed in the tyre-cord project of the assessee-respondent is covered by item No. 20 of the Fifth Schedule to the Income-tax Act, 1961, and as to whether the brokerage paid by the assessee should be allowed as a deduction. The questions, as framed, are as to whether the Income-tax Tribunal was right in its decision in favour of the assessee on these questions. The assessee has produced before us the earlier order of the Tribunal on the same questions in respect of the assessment year 1972-73 by way of an annexure to the affidavit of Trikkur Sitaram Narayanan, Secretary of the assessee-company, dated February 3, 1984. The said affidavit has been taken on record by consent.
3. As far as the question whether the tyre-cord can be said to be an "automobile ancillary" as contemplated by item No. 20 of the Fifth Schedule to the Income-tax Act is concerned, we find that the Tribunal has considered the evidence before it and come to the conclusion that the tyre-cord manufactured by the assessee is included in "automobile ancillaries" as contemplated by the said item No. 20. This decision appears to be essentially a decision based on appreciation of the factual evidence before the Tribunal. It appears that the Tribunal has, on the evidence before it, taken the view that, in a commercial sense, the tyre-cord manufactured by the assessee must be regarded as an automobile ancillary. It is not suggested before us that the Tribunal has come to this conclusion without evidence or that the conclusion is perverse. In fact, we find that in respect of the assessment year 1972-73 an application for directing the said question to be referred to this court for determination was rejected by the Tribunal. In view of this, we see no reason to direct the Tribunal to refer this question to us for determination. We find that our conclusion in this regard is supported by the decision of the Supreme Court in CIT v. Nirlon Synthetic Fibres and Chemicals Ltd. [1981] 130 ITR 14.
4. As far as the question of brokerage is concerned, again, the Tribunal in its orders in respect of the assessment years with which we are concerned has pointed out that the genuineness of payment of the said brokerage has not been disputed by the Department. The only contention taken by the Department was that the payment of brokerage was excessive as the products manufactured by the assessee did not require any canvassing. As the Tribunal has pointed out, it is for a businessman concerned to run his business as he likes and whether to employ a broker of not so long as the genuineness of the employment of the broker is not in question. The Tribunal has moreover pointed out that the payment of brokerage for the sale of articles is the normal and established practice in the market and no material was brought before the Tribunal to show that any extra-commercial consideration was involved in the employment of brokers by the assessee or in the payment of brokerage to them. In view of this, we see no reason to direct the Tribunal even to refer the questions in this regard for determination by this court.
5. In the result, the rule is discharged. No order as to costs.