9911796707
TMI Blog1985 (11) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ual. The assessment year involved is 1978-79 for which the previous year ended on 31-3-1978. The assessee filed his income-tax return for this assessment year on 17-1-1979 disclosing an income of Rs. 1,02,790 and an agricultural income of Rs. 1,000. The ITO proposed to tax the assessee on an income of Rs. 11,63,660. As the variance between the returned income and the income on which the assessee is proposed to be assessed is more than Rs. 1 lakh, the ITO forwarded the draft order dated 13-3-1981. It was issued to the assessee on 17-3-1981. The objections to the draft order were filed on 31-3-1981. Both the draft order and the objections were sent to the IAC. After receiving the draft as well as the objections the IAC posted the proceedings for enquiry on 19-9-1981. The notice of that enquiry reached the assessee on 23-9-1981. Directions under section 144B were issued on 25-9-1981, without hearing the assessee, approving various additions and disallowances proposed by the ITO. The IAC directed the ITO to complete the assessment accordingly. In pursuance of those directions of the IAC, the ITO completed his assessment order dated 26-9-1981. 3. Aggrieved against the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unnam Traders v. Addl. ITO [1972] 83 ITR 508 and Addl. ITO v. Ponkunnam Traders [1976] 102 ITR 366 the assessment should have been annulled. The Tribunal dismissed this plea of the assessee as untenable in view of the following decisions : Banarsidas Bhanot Sons v. CIT [1981] 129 ITR 488 (MP), H.H. Maharaja Raja Pawer Dewas v. CIT [1982] 138 ITR 518 (MP) and Third ITO v. Shivaji Park Gymkhana [1983] 4 ITD 462 (Bom.) (SB) and confirmed the order of the Commissioner (Appeals) dated 23-2-1982. After holding that the ratio of the Special Bench decision of the Tribunal in Shivaji Park Gymkhana's case fully applies to the facts of the present case, the Tribunal held as follows at the close of para 6 of its order : "... respectfully following the same we hold that the assessment order in the present case is not a nullity, that the failure of the Inspecting Assistant Commissioner to give a proper opportunity to the assessee of being heard is only a procedural irregularity and that the matter has to be restored to the Income-tax Officer for complying with the procedure under section 144B. The order of the Commissioner (Appeals) has only to be confirmed." Thus, by its order dated 17- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and it is no longer in existence as soon as the assessment order is set aside. It is also the case of the assessee that the proceedings should freshly start with passing of a fresh draft order. Further, according to the assessee's counsel, when the proceedings came back for fresh start there was change of incumbent in the office of the ITO. So the successor ITO may choose to send the same draft or a different draft. According to the learned advocate, the old draft is dead and gone. He vehemently argued that Explanation 1(iv) to section 153 of the Act states that in a case where objections were filed over the draft assessment order the directions of the IAC under clause (iv) of Explanation 1 to section 153 should be received within 180 days from the date of forwarding the draft order, or in a case where no objections were filed for the draft, the assessment should be completed within 30 days of such forwarding. So, the argument of the learned counsel continued that the date of forwarding of the draft is a crucial date to determine the period of limitation. Applying the law to the facts of the case, the learned counsel argued that the draft order was passed under section 144B(1) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et right that irregularity and so the assessment was to be set aside. He vehemently contended that the draft assessment order dated 13-3-1981 was not set aside. It is only the assessment order dated 26-9-1981 which was set aside, in order to facilitate correcting the irregularity which occurred in following the procedure under section 144B. In the submission of the learned departmental representative, sub-sections (1) to (4) of section 144B denote the stages of procedure to be followed one after the other. The assessment which would be completed on receipt of directions from the IAC under section 144B(4) is quite different and distinct from the draft order which would be passed by the ITO under section 144B(4). The ultimate assessment order which would be passed by the ITO under section 144B(4) may not conform to the draft order with regard to all, some or any addition proposed in the draft order because while giving directions the IAC may favourably consider the objections raised by the assessee to the draft. The irregularity has crept in while following the procedure under section 144B(4) inasmuch as opportunity to the assessee was not granted about his objections. In order to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance with the Appellate Assistant Commissioner's directions was bound by the directions given subject to carrying out those directions, he has the same powers as he had originally when making the assessment order under section 23..." 10. The view of the Andhra Pradesh High Court in Pulipati Subbarao Co. v. AAC [1959] 35 ITR 673 where it was held that the ITO's jurisdiction is restricted by the order of the AAC remanding the matter for fresh disposal was expressly dissented from by the Madras High Court. 11. The learned counsel for the assessee also relied upon the decision of the Madhya Pradesh High Court in Kundanlal Maru v. CIT [1982] 135 ITR 84 as well as the decision of the Kerala High Court in K.P. Moideenkutty v. CIT [1981] 131 ITR 356. So also he placed reliance upon the Gujarat High Court decision in Mrs. Meeraben P. Desai v. Union of India [1981] 130 ITR 922. 12. In reply the learned departmental representative submitted that the ratio of the above decisions do not apply to the facts of this case and they are quite distinguishable. 13. The learned counsel for the assessee also relied upon the following authorities to substantiate his plea that a mechanical or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is added to it. The question is whether the ITO is empowered to add a new source of income in the fresh assessment. It is argued that the AAC's order remanding the case shall not be treated as one setting aside the entire order and remanding the entire proceedings for reconsideration by the ITO. Their Lordships did not accept this plea and they held : "... We are unable to read the order of the Appellate Assistant Commissioner as in any way limiting the scope of the ITO when he makes the fresh assessment order. Once the order of assessment is set aside it is open to the Income-tax Officer to consider the entire matter afresh and neither the order of the Appellate Assistant Commissioner in terms restricts the Income-tax Officer to consider the issue relating to the estimation of the income alone nor there is any warrant for reading such a restriction of the power either under section 251(1)(a) or under section 143(3) under which the Income-tax Officer makes a fresh assessment...." Lower down, no doubt there was an observation of the Madras High Court as follows : "... But if the order of assessment is set aside and the Income-tax Officer is directed to make a fresh ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITO can be put. The said High Court preferred to have its own reservations about the second point decided by the Madras High Court when it observed 'in the instant case, it is not necessary for us to go into the later question to answer the question at hand'. In fact, in that case the scope of the powers of the ITO while passing fresh assessment orders was determined with reference to the scope of the remand order and the Madhya Pradesh High Court very much relied upon the Andhra Pradesh High Court decision in Pulipati Subbarao Co.'s case which the Madras High Court dissented from. Therefore, the Madhya Pradesh High Court was not an authority for the proposition that once the assessment order is set aside no betters on the powers of the ITO can be put. In the facts of the case before the Madhya Pradesh High Court, when the assessment order was set aside no restriction over the powers of the ITO were imposed while making the fresh assessment order, whereas in the case before us the remand was specifically made only to set right the irregularity committed while following the procedure under section 144B and this was made very clear in the Tribunal's decision dated 17-11-1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assing directions by the IAC. 17. The learned counsel for the assessee contended that clause (iv) of Explanation 1 to section 153 prescribes a limitation of 180 days from the date of forwarding draft assessment order to the date of giving directions by the IAC under section 144B(4). After a careful reading of clause (iv) of Explanation 1 to section 153, we are of the opinion that it prescribes a period for exclusion only. According to us, Explanation 1 comes into operation or comes to be considered only when certain period is sought to be excluded for the purpose of limitation. If in a given case the exclusion is not sought for and no enlargement of the period of limitation is required to be made out by the ITO it does not come to be considered at all. Even otherwise what all the provision says is that whatever period or, however much time might have been taken between the forwarding of the draft order and giving directions by the IAC, only 180 days would be allowed as a period entitled for exclusion for determination of the question of limitation. That is not the same thing as saying that direction given beyond 180 days from the date of service of the draft order is a nullity. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, is not correct. In this case there is clear evidence that the assessee was granted an opportunity to make the submissions before the ITO before passing a fresh assessment order dated 20-1-1984. The various decisions and authorities cited in support of this part of the assessee's contention are clearly distinguishable and do not apply to the facts of the present case and, hence, we need not consider them independently (or singularly). 19. The argument of the learned counsel that the assessment order dated 20-1-1984 is virtually an assessment passed by the IAC has no legs to stand in view of the fact that under section 144B(5) the statute itself make it obligatory on the part of the ITO to follow such and every direction issued by the IAC. So when the statute itself recognises that authority of the IAC no complaint can be made on the ground that the ITO did not apply his mind but only followed the orders of the superior officers and, hence, his own assessment orders are violative of principles of natural justice. For all the above reasons we are unable to hold that the assessment order dated 20-1-1984 is either null and void or vitiated by any illegality. Thus, the preliminary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual value determined by the municipality of Quilon was taken to be the property tax. According to him, the property tax levied by the municipality was Rs. 371 and in support thereof he filed Annexure IX of the paper book. He submitted that though the property tax was Rs. 371 for 1982-83 but as revision of tax is taken for every five years it may be roughly taken as property tax obtained on 31-3-1978. He contended that the whole building was used only in the business of the assessee. At any rate even if it is held otherwise, there is no room to determine the annual value at Rs. 6,000. According to him it should not be more than Rs. 2,650, i.e., Rs. 371 x 100./14 24. The learned departmental representative contended on the other hand that according to the inspector's report which is furnished at page 3 of his compilation filed before this Tribunal, the annual value over the building bearing Municipal Nos. MC XIV/433, MC XIV/429 also should be added to the annual value determined over the building MC XIV/432, in order to come to the total annual value of the building and if the annual value is thus computed on all the three buildings marked, the annual value taken by the ITO at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The possibility of making personal use of the car cannot be ruled out. The only ground raised was that the business increased considerably. It was urged by the learned counsel for the assessee that the profit derived in the accounting year relevant to this assessment year is more than Rs. 6 lakhs and, hence, making restriction to one-fourth of the expenses for the personal use of the car is more appropriate. 27. After hearing both sides, we feel we should accept this submission. We restrict the disallowance of one-fourth of Rs. 38,306. The assessee gets a relief of Rs. 3,192.50. 28. The next ground is with regard to the disallowance of Rs. 50,000 under section 40A(3) of the Act. The assessee made local purchases of shelled cashew kernels being 38,727.230 kgs. valuing Rs. 9,57,158.95. They include 1,134 kgs. of kernels valuing Rs. 50,000 purchased from a cashew worker called Shri Rajan. The amount was originally stated to have been paid through crossed cheque. It was subsequently turned out that the payment was made through bearer cheque No. 684331 dated 10-6-1977 drawn on Federal Bank Ltd., Quilon. In the beginning only bald address of Shri Rajan was furnished. He was not trac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him, the payment is covered by rule 6DD. 31. The learned departmental representative, on the other hand, strongly tried to uphold the legality, validity, reasonableness and correctness of the orders of lower authorities by adopting their reasoning as part of his arguments for upholding the disallowance under section 40A(3). His reasons are : (1) the provisions of section 40A(3) are categorical, unambiguous and clear and so a case covered by those provisions should be disallowed; (2) the payment of Rs. 50,000 was made at one time to Shri Rajan through a bearer cheque but not either by a crossed cheque or crossed demand draft; (3) the payment is not covered by rule 6DD which forms an exception. Identity of the person and the truth of the payment were not established; (4) cashew kernel is neither an agricultural produce nor a forest produce nor a product of horticulture. So also it was not a payment made to a grower, cultivator or producer of such an article; and (5) it is not the case of the assessee that cashew kernels have been manufactured or processed without the aid of power in a cottage industry nor the payment was made in a town or village not served by any bank. 32. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory letters from the creditors as the letters addressed have come back with the postal remarks 'addressee left'. Under those circumstances the Patna High Court held that the assessee had not only disclosed the identity of the creditors but also the sources of income. Here in this case also the bearer cheque dated 10-6-1977 given in favour of Shri K. Rajan was seized from the custody of the Federal Bank Ltd., Quilon. Copy of the cheque issued discloses that it was a bearer cheque and was issued for an amount of Rs. 50,000. The proceedings dated 6-3-1981 found at page 18 of the paper book filed by the department would disclose that the cheque was honoured and, therefore, there is sufficient evidence that the amount was paid to the person to whom the cheque was issued by the Federal Bank Ltd. As in the Patna High Court case, in the case before us we have to hold that Shri K. Rajan is not a fictitious person and that the primary onus which lay upon the assessee that he had paid Rs. 50,000 to Shri K. Rajan stood established. We, therefore, firstly hold that section 40A(3) does not apply to the payment made. Assuming without admitting that it does apply there is prima facie evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bought notes. The ITO found in his assessment order that in the past assessment years the assessee was consistently showing the yield of kernels from 36 to 40 lbs. per bag of cashewnuts as against the normal out-turn of 45 to 46 lbs. per bag. The assessee by his letter dated 29-9-1980 explained the reason for the low out-turn stating that the marketing federation entered into the cashew field for the first time in the accounting year in question. Since the officials of the corporation were new to this line the selection of raw nuts could not be done properly, resulting in the procurement of low quality and the exporters who took delivery of raw nuts from the federation ultimately suffered huge losses on account of the inferior quality of nuts supplied to them. It was also explained as the reason as to why other exporters were able to show better out-turn though they purchased raw nuts from the marketing federation. According to the assessee, the reason might have been that from out of the purchases made from the federation the proportion of African raw nuts might have been more or higher than that of the assessee in the case of other purchasers, Ultimately, it is explained tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. Suppression of out-turn in earlier years would not justify addition in later years. 35. From a reading of the impugned order of the Commissioner (Appeals), it would appear that he had accepted the tenability of the arguments (1) and (4) noted above. The argument Nos. (2) and (3) noted above were not accepted. The learned Commissioner (Appeals) held that the total bags of cashewnuts purchased were 16,823 of 80 kgs. each or 168 lbs. each. If suppression of 3 lbs. per bag is to be taken then the total quantity of suppression possible would be 50,469 lbs. But having accepted two out of the four arguments advanced and giving due credit to the substance of the arguments accepted, the learned Commissioner (Appeals) felt that, inasmuch as he has already upheld the additions of Rs. 50,000 under section 40A(3), he felt that the circumstances of the case would justify that retaining a further addition of Rs. 4.5 lakhs would be adequate and, therefore, he deleted the excess and, thus, partly allowed the appeal on this point. 36. Both the department as well as the assessee were aggrieved with this impugned decision of the learned Commissioner (Appeals). This department in its appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of raw cashewnuts may represent bogus purchases. According to the Commissioner (Appeals) the said quantity was an outer limit of either suppressed turnover of yester years or the suppressed turnover of this year. He did not rule out the possibility that in this bogus purchases no suppressed out-turn of yester years was included. He also did not state how much quantity of suppressed out-turn of yester years was included in this total of 300 bags or 50,469 lbs. However, taking an overall view and having regard to the fact that this total of 50,469 lbs. include the suppressed out-turn of yester years also, he wanted to make an addition of Rs. 5 lakhs and inasmuch as he sustained an addition of Rs. 50,000 paid to one single party, viz., Shri K. Rajan and he disallowed the same under section 40A(3), he made an addition of Rs. 4.5 lakhs towards bogus purchases. 39. It is the case of the department that having found the bogus purchases at 50,469 lbs. the learned Commissioner (Appeals) should have simply multiplied its price at Rs. 15.77 per pound and should have arrived at the figure of Rs. 7,95,896.13. However, as the ITO made only an addition of Rs. 7,48,377 the learned Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four instances where the local purchases made by some other assessees were accepted for the assessment year 1978-79. The four cases are furnished below : Sl. No. Name of the assessee P.A. No. Quantity of kernels Value purchased (lbs.) 1. K.A. Karim Sons 46-00-FN-3347/ 96,885 13,59,624 Kilikolloor, Quilon TVM(CC) 2. B. Ramanujan Thampi, PZ-7177/TVM 297,510 12,52,438 Eastern Cashew Co., (CC) Pattom, Trivandrum 3. P. Alikunju, PQ-7358/ALP(B) 54,726 13,53,939 M.A. Nazir Cashew Industries, Karunagappally 4. Global Export Enterprises 46-012-FT-2121/ 37,800 5,41,502 TVM(CC) In fact the Commissioner (Appeals) in his impugned order at paragraph 18 clearly gave the following finding : "The practice of local purchases supported by bought note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stocks he had : nor was he in the habit of taking inventory of the stocks on hand. This clearly shows that he treated that income as received only as and when he sold the stocks. In these circumstances, we reach the conclusion that the additional sum of Rs. 75,073 was income received by him during the year 1942-43." The ratio of the decision, however, applies only in a case where the assessee was not maintaining any stock account or was not in a habit of taking inventory of the stock on hand. In this case it was not the complaint of the department that the assessee was not maintaining any stock account of the purchase of either cashewnuts or kernels every year. No addition was also made for improper maintenance of stock account in any of the previous years. In such circumstances the Andhra Pradesh High Court decision does not squarely apply to the facts on hand. In the particular facts and circumstances of this case, there is every justification for the learned Commissioner (Appeals) to feel that the full scope of bogus purchases, viz., 50,469 lbs. include the suppressed out-turn of earlier years also. The ITO by his letter dated 14-8-1980 furnished at page 4 of the paper co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed out-turn of yester years. We also hold that when the practice of local purchases supported by bought notes was accepted in the case of other assessees there is no reason why this practice should be deviated only in the case of the present assessee before us. 42. In the result, we hold that the addition of Rs. 4.5 lakhs made by the Commissioner (Appeals) is quite in order. In our opinion, no material whatsoever is placed before us to further reduce the addition from Rs. 4.5 lakhs to any lesser figure by the assessee. Therefore, both the assessee as well as the department should fail on this ground. 43. The next ground in the assessee's appeal is about the addition made towards under-valuation of closing stock of tins. The ITO made an addition of Rs. 24,000 under this head. The opening stock of tins was 6,890 in number. Out of them 1,500 tins were used during the year. The closing stock of tins was 8,391. According to the assessee, the whole of the closing stock of the tins were damaged ones and their value was not more than Re. 1 per tin at which the stock was disclosed. The ITO held that the particulars furnished by the assessee about the purchase of tins during the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance received for supply of cashew shell oil. It was also intimated that the amount of Rs. 30,000 was sent in cash to the assessee. Taking all the factors into consideration the ITO treated the amount as bogus cash credit and added it to the income of the assessee. No further material was also produced before the learned Commissioner (Appeals) to come to a different conclusion. The learned Commissioner (Appeals) in his impugned orders stated that a mere statement that the credit represented trade advance does not further the case of the borrower. 45. When the matter came before us Annexures XII and XIII were filed by the assessee to show that the amount of Rs. 30,000 was not a cash credit but was a trade advance and it was in fact adjusted towards the supply of cashew shell oil in the next year. These Annexures were not produced before the Commissioner (Appeals) or before the ITO nor were considered by them. The allegation that this is not a cash credit but represents a trade advance was made in the letter dated 18-2-1981 a copy of which is furnished at page 14 of the paper compilation filed on behalf of the department. Had it been a fact that even by 28-3-1979 the trade advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock value if the submission of the assessee is found correct. As regards the disallowance of the provision of Rs. 88,517 is concerned, the impugned order of the lower authorities is confirmed. 48. The assessee made another provision for payment of CST on local purchases of kernels made. The total provision made was Rs. 51,686. The ITO disallowed it on the ground that levy of CST on local purchases of kernels was done away with by an amendment to Central Sales Tax Act, 1956 with effect from 7-9-1976. The learned Commissioner (Appeals) in his impugned order confirmed the disallowance on two grounds. Firstly, he stated that this is an exempted item from 7-9-1976. Secondly, he stated that the tax is provided in respect of local purchases which have been held to be bogus by the ITO. He held that on the first point itself the disallowance is to be confirmed. However, he felt that even on second ground the disallowance can be upheld despite his not upholding the ITO's finding that the entire local purchases are bogus. He further felt that local purchases to an extent of Rs. 2 lakhs are acceptable and the provision of tax thereon if otherwise admissible is to be allowed on that figure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While giving the Statement of Objects and Reasons for introducing clause (3) the Gazette of India dated 26-8-1976, Part II, Section 2, Extraordinary at page 1334 the reasons were explained as follows : "This clause seeks to insert with retrospective effect from 1-4-1976 a new sub-section (3) in section 5. The new sub-section provides that the last sale or purchase of any goods preceding sale or purchase occasioning export of those goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after, and was for the purpose of complying with the agreement or order for, or in relation to such export." In view of the above clarification about the intendment of sub-section (3) of section 5 the argument advanced by the learned advocate for the assessee that the purchases of cashew kernels are exempt from CST only when there are prior export orders to comply with, does not appear to be wholly correct. The correct position appears to be that the exemption could be available even if the last purchase of kernels was made in relation to export. If purchases were made in relation to exports there need not be prior con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively in the own business of the assessee. Further, this version was a later development. In Annexure X in the paper book filed by the assessee at which copy of the grounds filed before the Commissioner (Appeals) were furnished by the assessee, no such ground is taken. Further no material is placed before us as to what happened for a similar addition made in the immediately preceding assessment year. The assessee did not contend that the estimation of income on the two lorries was in any way excessive. Having regard to the above we are inclined to confirm the addition. 54. This leaves us with the last ground in the assessee's appeal complaining about the shortage in weighted deduction allowed to the assessee than what is due to it under law. So also we have to deal with the contention of the department that the commission payment to agents at Bombay (Nutmeat Trading Co.) was wrongly allowed or considered for weighted deduction. The total claim was made with reference to the following items totalling to Rs. 2,17,654. The items as well as the expenditure under each of them are as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment. As regards item No. 3, the ITO held that Gibbs Nathaniel of Canada is purported to be a buyer and commission agent. The payment made to the said party can utmost be said to be trade discount and, hence, it is not eligible for weighted deduction. Thus, out of the total of Rs. 1,99,477 claimed as deduction towards commission payment the ITO allowed weighted deduction only on an expenditure of Rs. 87,711 and disallowed weighted deduction on Rs. 1,11,766. In the appeal before the learned Commissioner (Appeals) he allowed weighted deduction even on commission payment made to Nutmeat Trading Co. That means he allowed weighted deduction on a further amount of Rs. 83,332 than the amount considered by the ITO. However, the learned Commissioner (Appeals) did not consider either items 1, 2 and 4 in the list given above or the amount of commission of 28,434 purported to have been incurred as commission payment to Gibbs Nathaniel of Canada. 56. In this second appeal the assessee contends that even on the abovesaid items it is duly entitled to weighted deduction. It is the contention of the department that the commission paid to Nutmeat Trading Co. was wrongly considered for weighted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere this was not done the expenditure can be incurred by the assessee either outside India or in India but it must pertain to the purposes mentioned in the various sub-sections which purposes are indicated as pertaining to various activities outside India...." Commission payment to Nutmeat Trading Co. is not covered under section 35B(1)(b)(iii). However, as regards the disallowance of weighted deduction on the commission payment of Rs. 28,434 purported to have been made to Gibbs Nathaniel of Canada is concerned, the assessee is not able to place before us that the facts on which the decision of the ITO is based are wrong. Under the circumstances, we have to hold that the finding of the ITO that the amount paid to Gibbs Nathaniel of Canada, satisfies the description of trade discount and not a commission payment. From the facts and circumstances of the case, the commission agent as well as the purchaser cannot be one and the same and, therefore, the disallowance of weighted deduction on an amount of Rs. 28,434 is to be upheld. The appeal of the department on the question of weighted deduction has to fail. In the result, the appeal of the assessee is partly allowed, whereas the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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