2009 (4) TMI 2 - HC - Income Tax

Receipt of commission for letting-out of property whether it was legally permissible for Assessee to stagger its income over a period of six years by showing the commission received as advance payments in Accounts Books - applying the principle of consistency HC decline to interfere in the facts & circumstances of the present case - in the absence of a written covenant oral statement that commission would be refundable if the Lease was terminated before stipulated tenure cannot be accepted

Summary

Issues:
1. Assessment Year 1994-1995:
- Whether ITAT correctly confirmed the deletion of commission addition made by the Assessing Officer?
- Whether ITAT correctly allowed the spreading of commission over six years?
- Whether ITAT's order was perverse in law regarding the benami concerns?
2. Assessment Year 1995-1996:
- Whether ITAT correctly confirmed the deletion of commission additions made by the Assessing Officer?
- Whether ITAT's order was perverse in law regarding the benami concerns?

Assessment Year 1994-1995:
The High Court emphasized that interference in factual findings by the ITAT is justified only if those conclusions are palpably perverse. The case revolved around the receipt of commission for property letting by AIFACS to various entities. The Assessee received commission from AIFACS, and the Assessing Officer questioned the distribution of this commission to different parties, suspecting tax evasion. The CIT(A) disagreed with the Assessing Officer's findings, allowing the Assessee to spread the commission over six years. The High Court upheld the CIT(A)'s decision, noting that the ITAT found no basis for the Assessing Officer's conclusion that the commission distribution was improper. The High Court cited legal precedents emphasizing the finality of ITAT's factual determinations unless they are perverse.

Assessment Year 1995-1996:
For this year, the issues were similar to the previous year, focusing on the correctness of the ITAT's confirmation of the deletion of commission additions and the alleged perversity in assessing benami concerns. The High Court reiterated the principle that the ITAT is the final fact-finding body, and its decisions are not to be questioned unless they are palpably perverse. The ITAT's findings were upheld, emphasizing that the Assessee's practice of spreading commission over six years, though not a common industry practice, was consistent with previous decisions. The High Court declined to interfere in this aspect, citing the rule of consistency. Additionally, the Court rejected the Tribunal's acceptance of an oral agreement without a written covenant, stating that such crucial terms should be documented. Ultimately, the Appeals were dismissed with no order as to costs, affirming the ITAT's decisions.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented, and the final decision rendered by the High Court.