2004 (3) TMI 31 - HC - Income Tax

Commission paid to various parties - Since, a doubt was raised with regard to the payments made to various parties as commission, enquiry was held. It was found that all the payments have been made as commission to various parties by demand drafts, wherein the identity of each of the agents was also established. It has also been found that the commission was paid exclusively for business purposes only. - All these are findings of fact and no substantial question of law, as is required to be formulated for deciding the appeal, arises in the same. - The appeal being devoid of merit or substance is hereby dismissed.

Summary

Issues:
- Appeal under section 260A of the Income-tax Act, 1961 against an order passed by the Income-tax Appellate Tribunal
- Commission payments made by the assessee-company for business purposes
- Reliance on a judgment of the Delhi High Court regarding commission payments

Analysis:
The judgment pertains to an appeal under section 260A of the Income-tax Act, 1961, filed by the Revenue against an order of the Income-tax Appellate Tribunal. The case involved commission payments made by an assessee-company engaged in manufacturing and sale of pharmaceutical formulations. The company had paid commissions totaling Rs. 13,35,336 during the previous financial year, with a portion paid on sales to the Government and its agencies, and the rest to non-Government purchases. An enquiry confirmed that all payments were made as commission to various parties for business purposes, with the identity of each agent established through demand drafts. The Tribunal, in its decision, relied on a judgment of the Delhi High Court in a similar case, where it was held that such commission payments were legitimate business expenses.

The High Court, after considering the facts and the Tribunal's reliance on the Delhi High Court judgment, concluded that no substantial question of law arose in the present appeal. The Court found that the payments made by the assessee were for genuine business purposes and that the matter had already been settled by the Delhi High Court in a previous case. As a result, the High Court held that the appeal lacked merit and substance, leading to its dismissal.

In summary, the High Court dismissed the appeal by the Revenue, as it did not raise any substantial question of law. The Court upheld the legitimacy of the commission payments made by the assessee for business purposes, based on established facts and the precedent set by the Delhi High Court in a similar case.