2014 (4) TMI 1157 - HC - Income Tax

Claim of payment of commission disallowed - Held that - On perusal of the order passed by the Commissioner, we find that the payment of commission to said Pradeep Shirodkar was duly accepted by the Commissioner to hold that the respondent assessee was entitled for deduction in terms of Section 37 of the Income Tax Act. The Tribunal whilst re assessing the findings of the Commissioner, has also confirmed the said findings and has also taken note of the fact that said Pradeep Shirodkar had also given a statement admitting the receipt of commission to the extent of ₹ 8,00,000/- from the assessee. This statement corroborated the returns filed by said Pradeep Shirodkar which also, inter alia, disclose the receipt of the commission from different persons. Considering that the facts finding authorities have concurrently come to the conclusion based on material on record that the amount of commission was paid to Pradeep Shirodkar and as such the respondent is entitled to deductions under Section 37 of the Income Tax Act, we find no perversity in the said findings which would result in a substantial question of law which could be examined in the present appeal.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding disallowance of expenditure on commission, cash deposits, and foreign travel expenses.

Analysis:
The appellant challenged the order of the Income Tax Appellate Tribunal regarding various disallowances made by the Assessing Officer. The issues raised included disallowance of expenditure on commission, taxation of cash deposits as undisclosed investment, and disallowance of foreign travel expenses. The Commissioner of Income Tax partly allowed the appeal related to the commission payment but dismissed the appeal concerning cash deposits and allowed 50% deduction for foreign travel expenses. Both the appellant and the assessee filed appeals and cross-objections before the ITAT, which partly allowed the cross-objection and dismissed the appellant's appeal.

The main ground raised by the appellant was the inability of the respondent to substantiate the claim of commission payment. The appellant argued that the burden of proof lies on the assessee to establish the deductibility of the commission paid. However, the Commissioner accepted the payment of commission to a specific individual, and the Tribunal confirmed this finding based on the individual's statement admitting the receipt of commission. The Tribunal concluded that the respondent was entitled to deductions under Section 37 of the Income Tax Act, and there was no perversity in the findings to warrant examination in the present appeal.

The High Court referred to the judgment of the Apex Court in a similar case, emphasizing that an appeal under Section 260A can only be on a substantial question of law. The court highlighted the tests to determine whether a substantial question of law is involved, such as affecting substantial rights, general public importance, unsettled issue, difficulty, or alternative views. The court cited another case where it was established that a finding of fact may give rise to a substantial question of law under certain circumstances, including when findings are based on no evidence or misreading of evidence.

After considering the facts and findings of the authorities below, the High Court found no perversity in the conclusions as they were supported by evidence on record. Consequently, the court held that no substantial question of law arose in the present appeal, leading to the dismissal of the appeal.