Ita/1140/2008 Of M/S Rajesh Exports Ltd v. The Assistant Commissioner Of Income Tax

IN THR HIGH COURT OF KARNATAKA AT BANGALOREDATED THIS THE 27[th|]DAY OF OCTOBER 2014 PRESEHBN THER HON’BLE MR JUSTICE N. KUMAR AND THR HON’BLE MR JUSTICBK B. MANOHARITA NO. 1140/2008 BRTWREN :M/S RAJESH EXPORTS LTDNO 4, BATAVIA CHAMBERS,K.K ROAD, KUMARA PARK WEST,BANGALORE 560 OO1 REP BY [TS CHAIRMAN.SRI RAJESH J MBHIA AGED ABOUT 45 YEAS| 8/O SRI JASWANTHRAI MEHTA ..APPELLANT. (By Sri S PARTHASARATHI, Adv.) AN THE ASSISTANT COMMISSIONER | OF INCOME TAX, CIRCLE 12(4)BANGALORE_ RESPONDENT (By Sri K V ARAVIND, Adv) This appeal is filed u/S.260-A of I.T.Act, 1961arising out of Order dated 14-08-2008 passed in ITA No.01/BNG/2008, tor the Assessment Year 2004-2005,praying that this Hon'ble Court may be pleased toformulate the substantial questions of law statedtherein and allow the appeal and set aside the orderpassedby|theITATBangalore|1n ITANo. 01/BNG/2008,dated 14-08-2008 in the interest ofjustice and equity. This appeal coming on for hearing this day, NKumar J., delivered the following:| JUDGMENT The assessee has preferred this appeal against theorder passed by the authorities declining to allowRs.2.00 crores as expenditure incurred for payment ofcommission. | 2. The following substantial question of law wereraised at the time of admission: i)Whether in law and on the facts and circumstances of the case, the Appellant was entitled to deduction under Section 37(1) of the Act on the expenditure incurred for payment of commission when the commission payment was for the services rendered by the agent which was agreed to at an arm’s length transaction where the parties are strangers and both are independent limited companies? ii)Whether in law and on the facts and circumstances of the case, the Tribunal was justified in disallowing the genuine expenditure especially when the Appellant did not have adequate opportunity before the lower authorities to support its case? iii)Whether in law and on the facts and circumstances of the case, the Appellant was able to substantially demonstrate the services rendered by the agent and the payment made by way of commission was reasonable and genuine which the recipient had also acknowledged and consequently is the decision of the Tribunal not perverse? circumstances of the case, the Appellant was able to substantially demonstrate the services rendered by the agent and the payment made by way of commission was reasonable and genuine which the recipient had also acknowledged and consequently is the decision of the Tribunal not perverse? iv)Whether in law and on the facts and circumstances of the case, the Tribunal was justified in rejecting the additional evidence adduced by the Appellant without appreciating that the same was required for the substantial cause in order to justify the claim of deduction for the expenditure? circumstances of the case, the Tribunal was justified in rejecting the additional evidence adduced by the Appellant without appreciating that the same was required for the substantial cause in order to justify the claim of deduction for the expenditure? oO.We have heard the learned counsel for the.parties. 4. Three authorities on appreciation of theevidence on record have concurrently held that theassessee has failed to prove the expenditure incurred byway of payment of commission. The assessing authorityin his order has given cogent reasons which areextracted by both the higher authorities. oO. We find that the reasoning given by the threeauthorities in coming to the conclusion that the assessee has failed to prove the expenditure incurred forpayment of commission is based on the legal evidenceon record and it cannot be found fault with. However,invoking Rule 29 of the IT Rules, some more documentswere produced before the tribunal requesting thetribunal to look into those documents. The tribunal bycogent reasons has refused to entertain the applicationsand the reasons are good and do not suffer from anylegal infirmity. Therefore, that portion of the order ofthe tribunal also cannot be tound ftault with. oO. We find that the reasoning given by the threeauthorities in coming to the conclusion that the assessee has failed to prove the expenditure incurred forpayment of commission is based on the legal evidenceon record and it cannot be found fault with. However,invoking Rule 29 of the IT Rules, some more documentswere produced before the tribunal requesting thetribunal to look into those documents. The tribunal bycogent reasons has refused to entertain the applicationsand the reasons are good and do not suffer from anylegal infirmity. Therefore, that portion of the order ofthe tribunal also cannot be tound ftault with. 6. Whether the assessee has incurred any excessexpenditure by way of payment of commission is purelya question of fact. When three fact finding authoritieshave carefully scrutinized the entire material on recordand concurrently held that the assessee has failed toprove the payment of commission, the authorities werejustified in disallowing the said expenditure. Though,four substantial questions of law were framed, it ispurely a question of fact and we do not find anyinfirmity in the orders passed by the authorities below. — We do not find any justification to interfere with the said order. In those circumstances, question of answeringthe so called substantial questions of law framed at thetime of admission would not arise. Accordingly, appeal1s dismissed. Brn sd/- | JUDGE sd/- JUDGE.