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TMI Blog1982 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... motive ? " I.T. Ref. No. 494 of 1975: " 1. Whether, there was any material before the Tribunal on which it could hold that Sri R. S. Goenka and Sri S. K. Goenka were given commission not on the basis that they rendered services to the assessee but because they happened to be the sons of Sri A. L. Goenka, an influential executive of certain companies ? 2. Whether, the said finding of the Tribunal is based on conjectures, suspicion and surmises not supported by any evidence or material and on a failure to consider the relevant material on record and is perverse ? 3. Whether, there was any material before the Tribunal to hold that the evidence produced by the assessee was not contemporary and was obtained or given with a motive ?" I. T. Ref. No. 495 of 1975: " 1. Whether, there was any material before the Tribunal on which it could hold that Sri R. S. Goenka was given commission not on the basis that he rendered services to the assessee but because he happened to be the son of Sri A. L. Goenka, an influential executive of certain companies ? 2. Whether, the said finding of the Tribunal is based on conjectures suspicion and surmises not supported by any evidence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemporary and was obtained or given with a motive ?" I.T. Ref. No. 514 of 1975 : " 1. Whether, there was any material before the Tribunal on which it could hold that Shri R. S. Goenka and Shri S. K. Goenka were given commission not on the basis that they rendered services to the assessee but because they happened to be sons of Shri A. L. Goenka ? 2. Whether, the said finding of the Tribunal is based on conjectures, suspicion and surmises not supported by any evidence or material and on a failure to consider the relevant material on record and is perverse ? 3. Whether, there was any material before the Tribunal to hold that the evidence produced by the assessee was not contemporary and was obtained or given with a motive ? " As would be apparent, there are three different questions for three different years dealing with the relevant assessment years. The facts are more or less, of course, identical. The assessee is a company and carries on advertising agency business. The assessment years, as we have mentioned hereinbefore, are 1963-64 to 1969-70, and the relevant accounting years are the earlier calendar years 1962 to 1968, respectively. The assessee had paid comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, 1956, addressed to R. S. Goenka recorded as follows : " With reference to our discussion with you, we hereby confirm that we agree to pay you commission @5% on the total business that will be placed with us by (1) Orient General Industries Ltd., (2) C. E. Morton India Ltd., in consideration of your being successful in securing us the publicity business of the aforesaid parties, who had told us of their decision to place their business with some other agency from the year 1957 onwards. We also agree to pay you commission at 5% in respect of any other parties whose business may be placed with us through your efforts. It should be distinctly understood that this commission will be payable to you only on the completed business and not merely on the contract that we may enter into with the said client. We trust that you will be successful in persuading the said parties to place their business with us, which will receive our best attention and service. We also hope that you will be able to secure some more accounts to our mutual interest. " In the letter dated 15th January, 1958, addressed to the assessee R. S. Goenka stated as follows: " I have to refer to my interview ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Press Exchange but my father is a director of C. E. Morton, Orient General Industries. received commission of 21% on orders booked. In the year 1962, I have received commission to the extent of Rs. 13,150.20. This payment is by cheque. I am assessed by Income-tax Officer, C-Ward at Dist. VI at GHR No. VI/1249-J/G. I am producing three letters dated 10th February, 1956, 15th January, 1958, (sic) wherein the percentage of commission payable to me have been mentioned. I do not maintain books of a/c. but maintain a bank a/c. where the cheque received by way of commission is deposited. There is no correspondence with the advertisers as they are all at Calcutta. " In the assessment order for the assessment year 1963-64, the ITO stated that, (1) both the assessee-company as well as the company from which R. S. Goenka had said to have secured business for the assessee belonged to the Birla group of companies, (2) the business activities of the assessee as well as other concerns of the group were closely connected, (3) the father of R. S. Goenka, viz., Sri A. L. Goenka was the director of M/s. Orient Industries Ltd. and C. E. Morton (India) Lid., (4) Sri A. L. Goenka was the director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment years 1963-64 to 1964-65. In a consolidated order dated 28th March, 1973, the AAC for the assessment years 1965-66 to 1969-70, relying on his earlier order for the assessment years 1963-64 and 1964-65, accepted the assessee's claim for deduction of the commission paid to R. S. Goenka and S. K. Goenka. In this connection, it may be relevant to mention that a few letters were produced before the AAC, for the first time. These letters were of different dates in the month of April, 1972, and one of these letters may be cited to give an illustration as to the contents of this letter. The letter dated April 12, 1972, reads as follows : " ALLAHABAD CANNING COMPANY (Proprietors: The New Swadeshi Sugar Mills Ltd.) Regd. Office: Industry House, 21, Ballygunge Place, 159, Churchgate Reclamation, Calcutta-19, Bombay-20. April 12, 1972. The Advertising Sales Promotion Co., 1, Ratendone Road, New Delhi. Dear Sirs, We have pleasure in confirming that it was at the specific request of your Shri S.K. Goenka that we decided to route all our advertising work through your agency. Yours faithfully, for the Allahabad Canning Company. (Sd.) Illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari and Chari Ltd. [1965] 57 ITR 400 (SC), relied on by the learned representative for the assessee, are entirely different from the facts obtaining in the present case. From the aforesaid discussion we are of the view that Sri R. S. Goenka and S. K. Goenka were paid the commission mainly on the ground that they happen to be the sons of Sri A. L. Goenka. In our view, the assessee's claim for deduction of the commission paid to various persons had to be viewed from the angle of an ordinary business man. It is difficult to believe that boys of the age of 15 or 21 without any experience could aspire to get such a huge commission other than for extra-commercial considerations. As regards Sri A. K. Gupta also the assessee had not produced any evidence to show that he had rendered any services to the assessee. Again, there was no agreement entered into between the assessee and Sri A. K. Gupta in this regard. In this view of the matter, we set aside the order of the AAC on this point and restore those of the ITO. " Upon these findings, as the Tribunal refused to refer the questions as suggested by the assessee, as directed by this court the questions as mentioned hereinbefore have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factum of the services being rendered in the past is of value or not must depend upon the facts and circumstances of the case and must be left to the judgment of the adjudicating authority. Having taken the entire course of events, the Tribunal has not put much credence on the services and the letters of the concerns, produced subsequently by the assessee, whose businesses were procured. We cannot say that the Tribunal acted improperly. In that view of the matter, we are of the opinion that the finding of the Tribunal in this case cannot be said to be erroneous. In that view of the matter question No. 1 is answered in the affirmative and in favour of the Revenue. Question No. 2 is answered in the negative and in favour of the Revenue and question No. 3 we answer by saying that the Tribunal was right in not putting much weight on the subsequent letters produced before the AAC. This is also answered in favour of the Revenue. As the questions are similar for all these years, the questions are answered in the manner indicated for all these years. In the facts and circumstances of the case, parties will pay and bear their own costs. SUHAS CHANDRA SEN J.-I agree. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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