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TMI Blog1976 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... at they were in the nature of entertainment expenditure is not justified. (iii) that disallowance of part of commission paid to Shri Champaklal is not justified; (iv) that rentention of addition of Rs. 5,000 out of Rs. 6,000 made by the ITO by rejecting books result is not justified. 2. I shall take up for disposal the ground relating to disallowance of commission to Shri Champaklal, first. It is stated by the learned respective for the assessee that the firm was previously carrying on business of sale of cotton cloth. It decided to diversify business by including chemicals. It employed Shri Chempaklal who is science graduate, in charge of this new line of business from the asst. yr. 1970-71 under an agreement according to which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm of United Chemical Corpn. in which he had 70 per cent share with his father who had 30 per cent. It is also pointed out that the trading result in respect of chemicals has disclosed substantial turnover and profit as compared to past which justified his getting payment of higher commission. 4. The learned Departmental Representative supported the orders of the Departmental authorities sustaining the disallowance. It is contended that Shri Champaklal who is closely related to three partners-brother of two and son of one, is merely a Science graduate and did not have any special or technical qualification or experience to warrant an attempt on the part of the assessee to retain his service even by payment of increased commission. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Department, that although three of the partners are related to Shri Champaklal they did not possess any educational qualification which may come of use in the line of new business in Chemicals started by them where Shri Champaklal is a Science graduate. Though it may be that it is not any special or technical or professional qualification, yet, his knowledge and approach in the subject is expected to the better than that of the other partners. Perusal of the agreement shows that Shri Champaklal was employed to look after and manage the affairs of this branch of business styled United Chemical Co. The Department has also disputed the fact of actual services rendered by Shri Champaklal and have in fact allowed remuneration in entirety i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... muneration for the disallowance. But no such material has been produced. It is merely presumed that because the increased remuneration paid is double the amount paid in the past it is referable only to Shri Champakla's relationship to partners. Further, it is also seen from the trading result that sales of chemicals after employment of Shri Champklal has considerably increased. Salary are upto Rs. 30,000 on average for immediately preceding asst. yrs. 1967-68, 1968-69 and 1969-70 whereas in the asst. yrs. 1971-72 sales of chemicals above are shown at Rs. 2,28,484 besides sales of colours of over Rs. 2,05,000 and other items such as mill gin-stores. Kali etc. of small amounts. Considering the materials, therefore, I accept the claim of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for sustaining the additions. 8. I am unable to sustain the addition on the ground stated by the ITO as well as AAC. Though it is not disputed that quantitative details are lacking, that fact need not necessarily lead to the rejection of book result and sustaining the addition. That may be consideration for estimating the profit if the profit disclosed is not reasonable or low compared to the normal rate of profit disclosed by other business-men in this line of business. No material has been brought on record by the Departmental Authorities which will show that the profit disclosed by the assessee is unreasonable low and cannot be accepted. On the hand the rate of profit disclosed in this commodity compares favourably with the profit d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jan., 1974, the from IT 30 calculating the amount of tax due and payable was prepared in January itself on 31st Jan., 1974 and thus the requirements have been complied within due time. He then referred to the provisions of s. 153(1) of the IT Act, 1961 and pointed out that what is provided under that section is that no order of assessment shall be made under s. 143 or 144 at any time after the expiry of prescribed period; and there is no requirement which states that, in addition to the order of asstt. being passed within prescribed time, the demand notice should also be issued. He then referred to commentary of Kanga Palkhivala, 1969 Sixth Edition page 811 under s. 156 were in it is stated by reference to the decision in CIT vs. Khemcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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