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TMI Blog1977 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of Rs. 13,750 for the assessment year 1966-67 ? (2) Whether the Tribunal had any materials before it to limit the guarantee commission to a period of 1 1/2 months ? " The assessee is a private limited company. For the assessment year 1966-67, it had claimed a deduction of guarantee commission of Rs. 13,750 paid to the managing director. The business of M/s. Pheros and Company (P.) Ltd. was the proprietary concern of one F.C. Agarwal. The business was taken over by a private limited company, that is, the assessee, took over the proprietary business on July 1, 1964, there was an existing arrangement that the State Bank of India would give overdraft, facilities against the security of stock-in-trade. In addition, a personal guaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be excessive within the meaning of s. 40(c) of the Act. After holding so, the Tribunal, however, observed that since the bank sanctioned the cash credit limit in May, 1969, and before that the company was utilising facilities of overdraft without any guarantee, the Tribunal limited the commission for 1 1/2 months only taking the entire amount claimed to be that for one year and in that view the Tribunal allowed only Rs. 1,750 out of the total claim of Rs. 13,750 under s. 37 of the Act. On the above facts the above-mentioned two questions of law have been, referred. From the order of the Tribunal, it is quite clear that the guarantee commission allowed to the managing director in the instant case was business expenditure of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to show that this 2 1/2 per cent. on the overdraft limit payable to the managing director was for 12 months. Since there is no such stipulation limiting the guarantee commission at the rate of 2 1/2 per cent. on the overdraft limit, we hold that the finding of the Tribunal taking the guarantee commission claimed as for 12 months and limiting the deductible amount to Rs. 1,750 is without any material on record. That being the position, on the own finding of the Tribunal which has held that the entire sum of Rs. 13,750 was business expenditure, the Tribunal is not justified in limiting the guarantee commission to the extent of Rs. 1,750 only instead of Rs. 13,750 for the assessment year 1966-67. We also find, as observed hereinabove, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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