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Issues Involved:
1. Whether there was any evidence before the Tribunal to conclude that the commission paid was exorbitant and lacked commercial consideration or business expediency. 2. Whether the Tribunal was justified in holding that the commission paid was exorbitant and lacked commercial consideration or business expediency. Summary: Issue 1: Evidence Before the Tribunal The Tribunal concluded that the commission paid to Voltamp Associates was exorbitant and lacked commercial consideration or business expediency. However, the High Court found that the Tribunal's conclusion was based on an incorrect application of legal principles. The Tribunal emphasized that the partners of Voltamp Associates, who were related to the directors of the assessee-company, did not personally render services. The High Court noted that the Tribunal overlooked the distinction between an ordinary agent and a del credere agent and failed to consider the fair market value of the services rendered. The evidence showed that the commission rates were consistent with industry standards, as demonstrated by similar payments made by the predecessor firm, Voltamp Corporation, to M/s. Escorts Ltd. Issue 2: Justification of Tribunal's Holding The Tribunal's decision was influenced by the fact that the partners of Voltamp Associates were related to the directors of the assessee-company and did not personally attend to the work. The High Court found this consideration extraneous and emphasized that the focus should be on whether services were rendered and if the remuneration was fair market value. The High Court highlighted that Voltamp Associates had significant experience and had contributed to a substantial increase in the assessee's sales. The Tribunal's dismissal of the evidence regarding the commission paid to M/s. Escorts Ltd. was deemed cursory and unjustified. The High Court concluded that the Tribunal's approach was flawed and that the commission paid was neither exorbitant nor unreasonable. Conclusion: The High Court answered both questions in favor of the assessee and against the revenue, stating that there was no evidence to support the Tribunal's conclusion that the commission was exorbitant and lacked commercial consideration or business expediency. The Commissioner was directed to pay the costs of the reference to the assessee.
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