9911796707
TMI Blog1999 (3) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Appellate Tribunal has referred the following question of law for the opinion of this court at the instance of the Revenue : "Whether, on the facts and in the circumstances of the case, the secret commission paid by the assessee is deductible as business expenditure under section 37 of the Income-tax Act, 1961 ?" This reference pertains to the assessment years 1979-80 and 1980- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal. Hence, this reference at the instance of the Revenue. We have heard Mr. R. V. Desai, learned counsel for the Revenue, and Mr. J. D. Mistry, learned counsel for the assessee. Seventy-five per cent. of the secret commission claimed to have been paid by the assessee has been allowed by the Commissioner of Income-tax (Appeals) as a deduction in the computation of the income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction or allowance shall be made in respect of such expenditure." Mr. Desai submits that in view of the insertion of the above Explanation with retrospective effect from April 1, 1962, in order to claim deduction under section 37(1), the assessee has to show that the amount paid allegedly as secret commission has been paid for any purpose which is not an offence or which is not prohibited by l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submits, that such an expenditure shall not be deemed to be incurred for the purpose of business or profession and no deduction or allowance shall be made in respect thereof. We have perused the newly added Explanation and considered the above submissions. We find merit in the submission of Mr. Desai, learned counsel for the Revenue, that in view of the amendment to section 37(1) of the Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the commission claimed to have been paid by the assessee by way of secret commission was an expenditure laid out or expended wholly and exclusively for the purpose of its business within the meaning of section 37(1) of the Income-tax Act, 1961, read with the Explanation appended thereto. However, having regard to the fact that the Tribunal could not have examined at the time it passed the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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