9911796707
TMI Blog1986 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by the assessee to the agent in sterling in London in four equal quarterly instalments each year. The agreement further provided that the same would continue for a period of five years from January 1, 1961. In terms of the aforesaid agreement, the assessee paid to its foreign agent 12,000 pounds in the calendar year 1961. The assessee was assessed to income-tax for the assessment year 1962-63, the relevant accounting period ending on December 31, 1961. In the assessment proceedings, the assessee claimed a deduction of the said amount of 12,000 pounds paid to its London agent under the said agreement. It was found that during the relevant period, the arrangement between the assessee and its London agent was that the assessee would also pay to its agent 4,000 pounds from Pakistan. Though the assessee actually got permission from the Reserve Bank of India to remit 12,000 pounds from India, the assessee, in fact, did not obtain permission to remit pounds 4,000 from Pakistan. It was found further that during the relevant period, the assessee received from its London agent three motor vehicles being Rover cars of the value of 4,000 which was arranged for by the said London agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner appeals were filed both by the Revenue as also the assessee to the Income-tax Appellate Tribunal. It was contended before the Tribunal on behalf of the Revenue that from the facts found in the assessment of the assessee in the assessment year 1962-63, it appeared that the assessee as also their London agents contemplated payment of remuneration of only pounds 8,000 and the balance 4,000 pounds had been paid for extra-commercial considerations, and, therefore, only pounds 8,000 could be allowed as deduction and the balance pounds 4,000 had been rightly disallowed. It was contended on behalf of the assessee, however, that the remuneration payable to the London agent had been fixed by the agreement of 1961. The said remuneration was fixed taking into account the rise in costs and the Reserve Bank approved the payment of the said remuneration under the fresh agreement. It was contended that the entire amount of pounds 12,000 should be allowed as a deduction and that the Appellate Assistant Commissioner had rightly deleted the disallowance of pounds 4,000. The Accountant Member of the Tribunal, after considering the order of the Tribunal in the earlier assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the assessee against the remittance of remuneration nor was there any exchange of goods. He also noted that the Reserve Bank had duly permitted the assessee to remit pounds 12,000 to its London agent in spite of the fact that in the earlier assessment year the assessee had received back a part of the amount paid by the assessee to its London agent on account of remuneration. He held that the assessee had discharged its initial onus under section 37(1) of the Income-tax Act, 1961, and it was for the Revenue to adduce evidence to show that in the instant assessment year there were facts which should justify the disallowance of any part of the deduction claimed. He noted that there was no evidence that in the assessment year involved, the assessee was not under any obligation to pay to its London agent, the entire amount of pounds 12,000 and no evidence had been found by the Appellate Assistant Commissioner to show that any part of the remuneration paid was for extra-commercial expediency. For the reasons as aforesaid, the judicial Member accepted the contention of the assessee. By reason of the difference of opinion between the two members, the matter was referred to a third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advocate for the assessee did not seriously press the same. It appears to us that Rs. 8,482 spent by the assessee was for the purpose of contesting the income-tax proceedings not of itself but of its parent company, Hungerford Investment Trust Ltd., which the assessee contested as an agent. No decision was cited on behalf of the assessee as an authority to show that in such cases the expenditure incurred would be allowable as deduction for the purpose of assessment of income-tax of the agent. For the above reasons, we answer the said question in the affirmative and in favour of the Revenue. On question No. 2, learned advocate for the assessee contended that the facts in the assessment year 1963-64 involved were entirely different from the facts in the earlier assessment year 1962-63. There was no allegation that the assessee in the instant assessment year had entered into any clandestine transaction with its London agent or that the assessee had received from its London agent out of the remuneration paid to the latter anything in cash or kind. The remuneration had been fixed for five years by the agreement dated July 11, 1961. The said agreement had not been found to be spurious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said agreement is supported by the fact that the Reserve Bank of India granted permission to the assessee to pay pounds 12,000 to its London agent. It is not clear to us, how the question, whether the entire amount of pounds 12,000 was meant to be a remuneration for the purpose of the assessee's business in India or any part thereof was meant for the business of the assessee outside India came to be considered by the third Member. The agreement dated July 11, 1961, is clear. The agent was appointed for the purpose of the assessee's business in India and the remuneration was fixed on that basis. At no stage was it contended by the Revenue that any part of the said remuneration payable to the London agent was for the purpose of any business of the assessee outside India. It is also not clear as to on what basis the Tribunal disallowed deduction of pounds 4,000. In the earlier assessment year, no doubt, pounds 4,000 were disallowed as goods of the same value had been received by the assessee from its London agent. But, in the present assessment year, there was no such transaction. In the event the entire amount of pounds 12,000 was not paid to the London agent, it would be o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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