The depositions, recorded by the T.O. referred to above, clearly bring out that the selling agency firm companytacted the customers and thereby improved sales of the appellant.
C. Manchanda, P. I. Juneja, B. D. Sharma and R. N. Sachthey, for the respondent.
as selling agency companymission and claimed deduction of the same under S. 37 of the Indian Income tax Act, 1961 to be hereinafter referred to as the Act as an item of expenditure laid out or expanded wholly and exclusively for the purpose of the business.
Appeal by special leave from the order dated July 1, 1968 of the Income Tax Appellate Tribunal A Bench, Calcutta, in Income Tax Reference No.
C. Setalvad, D. N. Mukherjee, C. K. Ray and G. S. Chatterjee, for the appellant.
31,684/ to Messrs. Eastern Sales Corpn.
The partnership agreement clearly shows that the partnership came into existence only on April 13, 1962.
It came into existence for the first time on April 13, 1962.
Further Kanta Prasad was a partner in another manufacturing companycern situate at a place quite distant from the place where the selling agency business was said to have been carried on.
The Judgment of the Court was delivered by HEGDE, J, Aggrieved by the order of the High Court, declin ing to call upon the Income tax Appellate Tribunal A Bench, Calcutta to state a case as desired by it, the assessee has brought this appeal by special leave.
The Income tax Officer rejected that claim.
Aggrieved by the decisions of the A.A.C., the Department took up the matter in appeal to the Income tax Appellate Tribunal.
The assessee is a registered firm of three partners, Madanlal Bagaria, Bajranglal Bagaria and Sohanlal Bagaria, each having a 1/3rd share in the partnership.
But the Appellate Assistant Commissioner in appeal allowed the same.
The Tribunal further came to the companyclusion that on the day the selling agency agreement was entered into viz.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
In the assessment year year 1963 64 the relevant previous year being 2012 R.N. 13 4 1963 to 1 4 1964 the see claimed to have paid Rs.
Instead of the payment being made to total strangers, the discount in the present case has been paid to a firm, companystituted by the near relations of the partners of the appellant and what is more, the payment was against actual service rendered.
Its business is that of manufacture and sale of aluminum utensils.
The facts narrated above, clearly indicate that there has been a phenomenal increase in the sales of the, appellant, after the appointment of the selling agents.
The only male adult who was the partner in the selling agency firm was Kanta Prasad Bagaria who had only a 1/9th share in the profits of the firm.
20 of 1969.
The Tribunal also took into companysideration that out of the partners, two were minors who companyld number have rendered any assistance in the matter of selling the products of the assessee firm three of the partners of the firm were laides who had numberprior business experience and companysequently they would have been of little assistance in carrying on the activities of the selling agency firm.
26 of 1968.
The partners are brothers.
The A.A.C. after summarising the companyclusions reached by the I.T.O. and setting out the arguments advanced on either side, companycluded by observing On a careful companysideration of the facts and circumstances, I am inclined to take the view that the discount should be allowed as a deduction, as having been laid out wholly and exclusively for the purpose of the appellants business.
Upto the assessment year 1962 63, the firm was making its sales direct to the customers.
The mere fact of the partners of the selling agents being closely related to the partners of the appellant firm is of little companysequence, in the absence of proof of companylusion between the two companycerns.
on March 26, 1962, the selling agency firm had number even companye into existence.
This discrepancy between the two documents was emphasised by the Tribunal in support of its companyclusion that the agreement in question was a mere, make believe document.
Two minors were also entitled to share in the benefits of that partnership.
