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TMI Blog2014 (11) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn for the assessment year 1988-89. Apart from other items, the respondent claimed deduction of a sum of Rs. 1,19,30,493/- under Section 37 (1) of the Income Tax Act (for short the Act) towards payment of secret commissions to promote its business. The Assessing Officer disallowed the same through order, dated 27.03.1991. Aggrieved by that, the respondent filed an appeal before the Commissioner of Appeals. Through an order, dated 10.12.1991, the Commissioner took the view that the said amount is allowable in view of the orders of the Tribunal in Appeal Nos.978 and 979/Hyd/88 for the assessment years 1983-84 and 1984-85 in respect of this very respondent. The appellant filed further appeal before the Tribunal feeling aggrieved by the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,19,30,493/- for the concerned assessment year. The Assessing Officer took the view that it is not permissible in law. On facts also, he was not satisfied. In the appeal preferred by the respondent, the contention in this behalf was dealt with in para 14 as under: The 7th ground of appeal is the disallowance of Rs. 1,19,30,493/- out of commission payments not proved. The question of secret payment of commission had been decided by the ITAT. Following the decision of the ITAT in Nos.978 & 979/Hyd/88 for the assessment year 1983-84 and 1984-85 by their order, dated 11.05.1990, I direct that this disallowance be restricted to Rs. 50,000/-. 6. Obviously because there was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act in computing the business income of the assessee? (3) Whether, on the material available in the case, the findings given by the Tribunal with regard to the genuineness and quantum of deductions to be allowed under the head of secret commission are perverse and based on irrelevant considerations?" 8. The third question was answered in favour of the Revenue and in that view of the matter, the answer to questions 1 and 2 was held to be not necessary. 9. We have gone through the judgment in detail. It is difficult to discern from it that a principle was laid to the effect that the secret commission as such cannot be paid at all, and if paid, cannot be deducted under Section 37 (1) of the Act. Some cloud on the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditures were not furnished in the returns and no plea was raised to the effect that disclosure of the names of the recipients of the commission would be detrimental to the interest. Relevant portion of the judgment reads as under: 12. In the instant case, as noticed supra, firstly the payment itself is not established and secondly it is not the case of the assessee before the assessing authority that the particulars of the persons to whom secret commission was paid could not be supplied without detriment to the business of the assessee having regard to the nature of the business of transport of cargo carried on by the assessee-company. Looking from that angle, the above judgment of the Bombay High Court has no bearing to the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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