Bombay High Court
Smt. Suhasinibai Goenka vs Commissioner Of Income-Tax on 29 September, 1992
Equivalent citations: [1995]216ITR518(BOM)
JUDGMENT H.W. Dhabe, J.
1. The following question is referred to us by the Tribunal :
"In the facts and circumstances of the case, was the assessee entitled to claim deduction from her income otherwise determined for the assessment years 1974-75 and 1975-76, on account of the commission paid By the assessee to Shri Jamnalal Goenka ?"
2. The facts of the case are that, according to the assessee, her husband was managing the work of her factory and was procuring work for it also for which the remuneration in question which was claimed as business expenditure was paid to him during the assessment years 1974-75 and 1975-76. The learned Income-tax Officer disallowed the claim for both the above assessment years. However, in appeal against his order for the assessment year 1974-75, the learned Appellate Assistant Commissioner reversed the finding of the learned Income-tax Officer and allowed the commission paid to the husband of the assessee as business expenditure. In taking the above view, the learned Appellate Assistant Commissioner relied upon the fact that in the earlier years, the assessee was incurring losses whereas in the year in question she earned huge profits because her husband who was an influential person procured voluminous work for her factory. He also referred in this regard to the statement in the written submissions of the assessee to the effect that because of the efforts of her husband she could obtain work for her factory which otherwise would have gone to Malkapur. He then held that the commission paid to the husband of the assessee in 1974-75 was not for personal considerations but was for the business purpose of the assessee. The Department, feeling aggrieved, challenged the above view of the learned Appellate Assistant Commissioner by filing an appeal before the Tribunal.
3. As regards the assessment year 1975-76, as in the year 1974-75, the learned Income-tax Officer had disallowed the commission paid to the husband of the assessee as being not business expenditure which view was affirmed by the learned Appellate Assistant Commissioner in the appeal preferred by the assessee against the above order of the learned Income-tax Officer on the ground that it was not clear for which items of business the influence was exercised by the husband of the assessee as a minister and further on the ground that it was not proved whether the husband of the assessee was a paid employee of the assessee or that he rendered any services to the assessee at all. Feeling aggrieved, the assessee preferred an appeal before the Tribunal challenging the above orders of the learned Appellate Assistant Commissioner and the Income-tax Officer.
4. It is thus clear that the learned Appellate Assistant Commissioner had taken contradictory views for the above two assessment years 1974-75 and 1975-76, on the question of admissibility of the remuneration paid to the husband of the assessee as being business expenditure. It, therefore, appears that in order to substantiate her case, the assessee filed considerable documentary evidence before the learned Tribunal during the hearing of the rival appeals by the parties for the above assessment years 1974-75 and 1975-76. The learned Tribunal, however, did not permit the assessee to produce the additional evidence at such a late stage before it since she had not given any reason for not producing the same before the authorities below and particularly when she was not prevented from doing so. On the merits, the learned Tribunal held that except her assertion the assessee had not produced any material to substantiate her claim that she could get voluminous business because of the influence of her husband and that there was any long-standing practice in the line of her business to give such commission. It also held that in view of the practice of the Maharashtra State Co-operative Marketing Federation to distribute the work amongst all the ginning and pressing factories according to their capacity it could not be said that the husband of the assessee procured any business for the assessee. It thus affirmed the orders of the learned Income-tax Officer for both the assessment years. It is on the basis of the above facts and circumstances that the above question is referred to us for consideration.
5. In considering the question referred to us, what has to be principally borne in mind is that in respect of the assessment years 1974-75 and 1975-76, there are diametrically opposite views taken by the learned Appellate Assistant Commissioner regarding the question whether the commission paid to the husband of the assessee was business expenditure or not as observed by the learned Tribunal itself in paragraph 6 of its order of reference. It has further to be seen that, as urged on behalf of the assessee, she had no reason to believe that the order of the learned Appellate Assistant Commissioner would go against her for the assessment year 1975-76 because of which when it went against her she sought to file some more documents to substantiate her claim in the appeal before the Tribunal. There was thus substantial cause in the instant case for the Tribunal to allow the additional documents to be filed in the appeal before it for their fair and just disposal by exercising its power to allow production of additional evidence conferred upon it under rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. Moreover, although there was the practice of the marketing federation to give cotton for ginning and pressing according to the capacity of the factory, no material was placed before it or any of the authorities below in that regard. There is thus total lack of material to support the above finding of the learned Tribunal.
6. In these circumstances, the learned Tribunal should have allowed the assessee to file the additional documents on record before it and consequently should have given an opportunity to the Revenue also to place material in support of its case. The interest of justice thus requires that the proceedings should be remanded to the Tribunal in the light of our observations made above. In directing the remand in such circumstances, we are supported by the judgment of the Calcutta High Court in Vishnu Agencies (P.) Ltd. v. CIT (No. 1) [1979] 117 ITR 754.
7. We, therefore, send the matter back to the learned Tribunal with the direction that it should allow the assessee to produce documents on record which are filed by her before it. We also direct the learned Tribunal to allow the Revenue to produce on record material in support of its case. It should then decide according to law the question whether the commission paid by the assessee to her husband in the assessment years 1974-75 and 1975-76 is business expenditure or not.
8. In view of the remand, it is not necessary to answer the question referred to us. No costs.