9911796707
TMI Blog1994 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... in the next year and there is no suppression of income." 2.1 During the year under appeal the assessee company advanced loans to M/s Eimco Elecon (India) Ltd. The ITO noted that the directors of the assessee company and Eimco Elecon (India) Ltd. had close family relations. He further noted that the amount of Rs. 1,13,659 had accrued as interest. But the assessee accounted for only a sum of Rs. 64,557 on cash basis in the assessment year under appeal. Since the assessee was following mercantile system of accounting, the ITO held that the assessee should have declared the entire interest of Rs. 1,13,659 during the year under appeal as it had accrued to the assessee. He accordingly made an addition of Rs. 49,103. 2.2 On appeal, the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under appeal total sales were to the extent of 3.74 crores on which the commission of Rs. 16.14 lakhs was paid. In the immediate preceding year a commission of Rs. 8.75 lakhs was paid on the sales of Rs. 3.33 crores. It was noticed by the learned ITO that the increase in the payment of commission was abnormal in the year of account though there was no marked increase in the sales. On verification of the details of working of the commission given by the assessee on 8th March, 1985 to the ITO, it was noted that a provision of Rs. 5,69,259 for commission was made on the sales of Rs. 1.14 crores. It was explained before the Assessing Officer that the Milling Trading Co. P. Ltd. by its extra efforts had booked orders worth approximately of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amount of Rs. 5,69,259 merely provided in the books has been claimed as a deduction. It is admitted by the learned counsel that this amount of Rs. 5,69,259 has not been offered to tax by the Milling Trading Co. (P) Ltd. because it has not been received by that company. It is stated that this income will be credited in their books of account when the amount will be paid to them though the books of that company are also stated to have been maintained on mercantile system. Here the learned counsel has submitted that the deduction of Rs. 5,69,259 has been claimed on provision basis because the liability has accrued and because the appellant has been maintaining books of account on mercantile system of accounting. The arguments extended on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt. 31st March, 1986 and at page 57 is copy of bill providing for Rs. 5,69,259 "being amount of special commission on order booking of Rs. 1,13,85,175 @5%". This bill is dt. 31st March, 1986. Thus it is clear that the provision of the amount of Rs. 5,69,259 is an after thought with the object of reducing the incidence of taxation. It was not at all warranted by commercial/business considerations. There was no justification whatsoever for providing special commission at the rate of 5% in addition to 5% commission agreed by a written agreement. The whole exercise was made by the assessee to hoodwink the Revenue with a view to evade tax. Under the circumstances we uphold the finding of the authorities below and dismiss this ground. 4. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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