Transport Corporation of India Ltd., Hyderabad V. ACIT, Hyderabad

ITA 430/HYD/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59219 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 30-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: R S AGARWAL
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Depreciation; Business expenditure; Search and seizure; Charitable institution; Retrospective amendment; Additional evidence; Cost of acquisition; Speculation loss; Bad and doubtful debts; Difference of opinion; Assessment record; Onus to prove; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings; Capital expenditure
• Section: 40A(3); 143(3); 50C; 142(1); 260A; 37(1); 32; 147; 68; 69; 27; 148; 54; 37; 6; 263; 63; 132; 12; 28; 10; 2; 11; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. ASSESSME NT YEAR APPELLANT RESPONDENT 1214/HYD/2004 295/HYD/2006 430/HYD/2007 431/HYD/2007 1125/HYD/2007 19/HYD/2009 789/HYD/2009 2001-02 2002-03 2000-01 2003-04 2004-05 2005-06 2001-02 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. (PAN AAACT 7966 R) ASST. COMMISSIONER OF INCOME-TAX CIRCLE- 3(3), HYDERABAD 21/HYD/2005 794/HYD/2007 795/HYD/2007 2001-02 2000-01 2003-04 ASST. COMMISSIONER OF INCOME-TAX CIRCLE 3(3),RANGE-3, HYDERABAD M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. (PAN AAACT 7966 R) ASSESSEE BY : SHRI Y.RATNAKAR & SHRI R.S.AGARWAL DEPARTMENT BY : SHRI V.SRINIVAS DATE OF HEARING 1.12.2011 DATE OF PRONOUNCEMENT O R D E R PER BENCH: THIS IS A BUNCH OF TEN APPEALS SEVEN BY THE ASSESSEE A ND THREE BY THE DEPARTMENT. ASSESSMENT YEARS RELEVANT ARE FROM ASSESSM ENT YEAR 2000- 01 TO 2005-06. THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) IV, HYDERABAD. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF, WITH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 2 2. THE FIRST COMMON ISSUE INVOLVED IN ALL THESE APPEAL S OF THE ASSESSEE AS WELL AS THE DEPARTMENT RELATES TO DISALLOWANCE OF COMM ISSION PAID TO EMPLOYEES, REPRESENTATIVES AND/OR AGENTS OF CUSTOMERS. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS AS ONE OF THE LARGEST CARGO MOVERS HAVING MOR E THAN 800 BRANCHES SPREAD THROUGHOUT THE COUNTRY. IN THE COURSE OF ITS TRANSPORT BUSINESS, ASSESSEE CLAIMED TO HAVE MADE COMMISSION PAYMENTS B Y WAY OF INCENTIVE TO VARIOUS EMPLOYEES, REPRESENTATIVES AND AGEN TS OF ITS CUSTOMERS, WHOSE CARGO WAS CARRIED FROM ONE PLACE TO ANOTHER THROU GH ITS LARGEST FLEET OF SURFACE TRANSPORT CARRIERS. THESE COMMISSION PAYMENTS WERE MADE AS AN INDUCEMENT FOR BRINGING TRANSPORTATION BUSINESS TO THE A SSESSEE IN PREFERENCE TO OTHER TRANSPORT CARRIERS, BESIDES TO SECURE EARLY PAYME NT OF ITS BILLS FOR TRANSPORTATION AND AMICABLE SETTLEMENT OF THE CLAIMS, WH ICH SOMETIMES ARISE IN THE NORMAL COURSE OF BUSINESS ON ACCOUNT OF INCIDENTAL AND UNAVOIDABLE DELAYS AND DAMAGES SUFFERED TO THE CARGO IN THE COURSE OF LOADI NG, UNLOADING AND TRANSPORTATION FORM ONE PLACE TO ANOTHER. 4. WHILE FOR THE ASSESSMENT YEARS 2001-02 AND 2002 -03, THE ASSESSING OFFICER DISALLOWED 15% OF THE AMOUNTS OF COMMISSIO N CLAIMED OF RS.5,15,28,011 AND RS.5,21,16,149, WHICH WORKED OUT TO RS.77,29,201 AND RS.78,17,422 RESPECTIVELY, ON A TOTAL TURNOVER OF RS.4 51,50,78,301 AND RS.468,09,42,289 RESPECTIVELY, FOR THE ASSESSMENT YEARS 20 00-01, 2003-04, 2004-05 AND 2005-06, THE ASSESSING OFFICER DISALLOWED TH E ENTIRE AMOUNTS OF COMMISSION CLAIMED OF RS.4,71,59,038; RS.4,59,79,292 AND RS.2,97,24,988 RESPECTIVELY, ON TOTAL TURNOVER OF RS.4,69,98,808, RS.4 70,04,77,024, RS.554,06,68,903 AND RS.615,30,35,812 RESPECTIVELY. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 3 5. THE FACTORS WHICH WEIGHED WITH THE ASSESSING OFFICER T O MAKE THE IMPUGNED DISALLOWANCES OUT OF COMMISSION PAYMENTS ARE SUM MARIZED BELOW- A. THE ADDRESSES OF THE PAYEES ARE NOT AVAILABLE IN THE SEL F MADE VOUCHERS AND OTHER DOCUMENTS PRODUCED ON BEHALF OF THE ASSESSEE COMPANY. SOME OF THE VOUCHERS DO NOT CONTAIN THE SIGNA TURES OF THE PAYEES. IF THE PAYMENTS ARE GENUINE, THE ASSESSEE SHOULD HAVE FURNISHED CONFIRMATION LETTERS FROM THE PAYEES GIVING T HEIR FULL ADDRESS. THE SIGNATURES OF THE PAYEES ARE IN MOST CASES MERE SCRIBBLING. IT COULD BE POSSIBLE THAT THE EMPLOYERS OF THE ASSESSEE COMPANY, WHO PREPARED THE VOUCHERS, THEMSELVES SIGNED AS P AYEES; B. AFFIDAVITS OF THE REGIONAL MANAGERS FILED BY THE ASSESSEE COMPANY ARE STEREO TYPED IN NATURE. JUDICIALLY IT HAS BEEN HELD THAT THE AFFIDAVITS CANNOT BE TREATED AS PROPER EVIDENCE UNLESS THE CONTENTS A RE BASED ON PROVED FACTS. THE SELF SERVING AFFIDAVITS HAVE NO EVID ENTIARY VALUE. C. THE SO CALLED COMPARABLE CASES OF M/S. PATEL ROADWAYS LTD., M/S. ASSOCIATED ROAD CARRIERS LTD., M/S. ABC INDIA LTD AND M/ S. SRI RAMDAS MOTOR TRANSPORT LTD. ARE NOT RELEVANT. MOST OF THE CA SE ARE NOT COMPARABLE. IN ANY EVENT, THE PERCENTAGE OF COMMISSION PAYMENT BY THE ASSESSEE IS EXCESSIVE; D. MOST OF THE ORDERS FOR TRANSPORTATION EXECUTED BY THE A SSESSEE COMPANY ARE BULK IN NATURE. THESE HAVE BEEN OBTAINED ON THE BASIS OF TENDERS CALLED BY BIG AND REPUTED INDUSTRIAL COMPANIES. THEREFORE, THERE WAS NO NEED TO PAY THE SECRET COMMISSION TO THE AGENTS/EMPLOYEES OF THE CONSIGNOR. E. THE ARGUMENT OF THE ASSESSEE COMPANY THAT IT HAS TO KEEP THE EMPLOYEES OF THE CONSIGNORS IN GOOD HUMOUR BY WAY OF IN DUCEMENT FOR BRINGING/GRANTING TRANSPORT BUSINESS TO THE ASSESSEE COMPAN Y IN ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 4 PREFERENCE TO OTHER TRANSPORT CARRIES; TO SECURE EARLY PA YMENTS OF ITS BILLS, TO MINIMIZE CLAIMS OF ITS CUSTOMERS FOR DELAYS AS WELL AS TO SECURE AMICABLE SETTLEMENT OF CLAIMS ON ACCOUNT OF DAMAGES SU FFERED TO THE CARGO IN THE COURSE OF LOADING, UNLOADING AND T RANSPORTATION FROM ONE PLACE TO ANOTHER, APPEARS TO BE SELF-SERVING ST ATEMENT AND IS NOT SUPPORTED BY THE EVIDENCE. SUCH A STAND IS NOT ACCEP TABLE. F. MOREOVER, PAYMENT COMMISSION BY THE ASSESSEE COMPANY IS OPP OSED TO PUBLIC POLICY, AS HELD BY THE HONBLE ANDHRA PRADESH HIGH COURT IN CIT V/S. KODANDARAMA & CO.( 144 ITR 395). G. THE DECISION OF THE JURISDICTIONAL HIGH COURT IN ASSESSEES O WN CASE FOR ASSESSMENT YEARS 1981-82 TO 1984-85, REPORTED IN 256 IT R 701 IS AGAINST THE ASSESSEE COMPANY. IT WAS HELD THEREIN IN NO UNCERTAIN TERMS THAT IT IS THE DUTY OF THE ASSESSEE TO PROVE THE G ENUINENESS OF PAYMENTS. THE ASSESSEE COMPANY FAILED TO DISCHARGE ITS ON US AND PROVE THE IDENTITY OF THE PAYEES, AS WELL AS PROVE THE GENUINENESS OF PAYMENTS, SINCE THE PAYMENT VOUCHERS DID NOT CONTAIN THE ADDRESSES OF THE PAYEES. THE DECISION OF THE HONBLE HIGH COURT HA S ALSO REACHED FINALITY WITH THE DISMISSAL OF SLP. H. THE FACT THAT DURING THE LAST SEVERAL YEARS, THE DEPAR TMENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE, IS HELD IRRELEVANT. TH ERE IS NO RES JUDICATA IN ASSESSMENT PROCEEDINGS. I. THE FACT THAT THE ASSESSEE COMPANY IS UNABLE TO FURNISH TH E ADDRESSES OF THE RECIPIENTS OR PRODUCE SUCH PERSONS BEFORE THE ASSESSING OFFICER PROVES THE FACT THAT THE ENTIRE COMMISSION PAYMENT WAS I N THE NATURE OF SECRET COMMISSION AND THEREFORE, NOT ADMISSIBLE. FURT HER, THE EFFECT OF INSERTION OF EXPLANATION TO S.37(1) OF THE ACT WIT H RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 1962-63 IS ALSO TO BE CONSIDERE D IN THE CONTEXT OF ASSESSEE COMPANYS CLAIM AS TO THE ALLOWABILITY O F SECRET COMMISSION. THE DECISIONS OF THE MADRAS HIGH COURT IN G.A .VASANT ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 5 V/S. CIT (265 ITR 481) AND OF THE ORISSA HIGH COURT IN TARINI TARPULINE PRODUCTIONS V/S. CIT (254 ITR 495) ARE IN FAVOUR OF THE DEPARTMENT, SINCE IN THOSE CASES DISALLOWANCE OF ENTIRE SECRE T COMMISSION WAS UPHELD. J. THE ASSESSEES COMPANYS OF OFFER OF DISALLOWANCE OF PART OF COMMISSION OF A SUM OF RS.70 LAKHS FOR THE ASSESSMENT YEAR 2000-01 AND RS.80,00,000 FOR EACH OF THE ASSESSMENT YEARS 2003-04 AND 2004-05, THROUGH ITS LETTER DATED 19.1.2006 IS UNILAT ERAL. ASSESSEES CONTENTION THAT THE ADDL. COMMISSIONER AND CIT AGREED TO THE PROPOSED DISALLOWANCE BY THE ASSESSEE COMPANY IN ASSESSMENT YEA R 2000-01 IS NOT CORRECT, AND THE ASSESSEES UNILATERAL OFFE R OF DISALLOWANCE CANNOT BE CONSTRUED AS CONSENT BY THE DEPARTM ENTAL OFFICERS, AND IN ANY CASE IT IS FOR THE ASSESSING OFFICER TO DECIDE WHETHER THE AMOUNTS IN QUESTION ARE DISALLOWABLE OR NO T. 6. ON APPEAL, WHILE THE COMMISSIONER OF INCOME-TAX(A PPEALS) SUSTAINED ENTIRE AMOUNTS OF DISALLOWANCE MADE BY THE ASSE SSING OFFICER FOR THE ASSESSMENT YEARS 2002-03, 2004-05 AND 2005-06, HE GAVE P ARTIAL RELIEFS FOR THE ASSESSMENT YEARS 2000-01, 2001-02, AND 2003-04 AND SU STAINED DISALLOWANCES ONLY TO THE EXTENT OF RS.93,99,774; 25,7 6,400, AND 94,31,808 RESPECTIVELY FOR THESE THREE YEARS. 7. AGGRIEVED BY THE DISALLOWANCES SUSTAINED BY THE CO MMISSIONER OF INCOME-TAX(APPEALS) FOR ALL THESE YEARS, ASSESSEE PREFERRE D THE PRESENT APPEALS BEFORE THE TRIBUNAL. SIMILARLY, AGGRIEVED B Y THE PARTIAL RELIEFS GRANTED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) FOR THE ASSE SSMENT YEARS 2000- 01, 2001-02 AND 2003-04, REVENUE ALSO PREFERRED APPE ALS FOR THESE THREE YEARS. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 6 8. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONT ENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT THE VOUCHE RS PREPARED BY EVERY ASSESSEE ARE ALWAYS SELF MADE, AND AS SUCH THIS CANNOT BE A GROUND TO REJECT THE EVIDENCE IN THE FORM OF VOUCHERS. IT IS SUBMITTED T HAT IN THE PRESENT CASE, THE VOUCHERS OF THE ASSESSEE ARE ACCOMPANIED WITH COPIES OF R ELEVANT CONSIGNMENT NOTES GIVING FULL DETAILS ABOUT THE CONSIGNME NT, THE NAMES AND ADDRESSES OF THE CONSIGNERS/CONSIGNEES, THE PLACE OF ISSUE/B OOKING, DESTINATION OF THE CARGO AND FREIGHT CHARGES, THE DATE OF PAYMENT AND THE AMOUNT OF COMMISSION PAID AND THE NAMES OF THE PAYEES. THE VOUCHERS ALSO CONTAIN THE ACKNOWLEDGEMENTS IN RESPECT OF THE RECEIPT OF COMMISSION BY THE CONCERNED PAYEE. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE D EBIT VOUCHER READ WITH THE CONSIGNMENT NOTE ANNEXED THERETO, IS NO GOOD EVIDENCE IN RESPECT OF PAYMENT OF COMMISSION BY THE ASSESSEE COMPANY. THE ONLY MI SSING LINK IS THE ADDRESS OF THE PAYEE. IT HAS BEEN EXPLAINED THAT IF T HE FULL IDENTITY OF THE AGENTS/EMPLOYEES OF THE CUSTOMERS TO WHOM SUCH COMMISSION PA YMENTS ARE MADE, IS DISCLOSED IT WOULD GREATLY JEOPARDIZE THE BUSI NESS INTERESTS OF THE ASSESSEE COMPANY. MOREOVER, SINCE THE PAYMENTS ARE MADE I N VERY SMALL AMOUNTS TO LARGE NUMBER OF PERSONS, THE DETAILS AS TO TH E ADDRESSES OF THE PAYEES ARE NOT MAINTAINED. THE ASSESSEE COMPANY MAINTAIN ED VOUCHERS IN EVERY CASE COMMISSION PAYMENT WITH THE SIGNATURE OF THE P AYEE, AND THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC CASE, WHERE HE DID NOT FIND THE SIGNATURE OF THE PAYEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MERELY PROCEEDED ON SUSPICION WHEN HE STATED THAT THE EMPLOYEES OF THE ASSESSEE COMPANY WHO PREPARED THE VOUCHER S, MAY HAVE SIGNED AS PAYEES AS WELL. SUCH AN ALLEGATION IS WHOLLY B ASELESS AND ARBITRARY. THE FURTHER ALLEGATION OF THE ASSESSING OFFICER THAT THE SIGNATURES IN MOST CASES ARE MERE SCRIBBLING IS ALSO NOT CORRECT. THE SIGNATURES ON THE VOUCHERS ARE ONLY ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 7 THOSE OF THE PAYEES AND IT IS NOT CORRECT FOR THE ASSESSEE TO DICTATE THE CUSTOMERS OR FOR ANY ONE ELSE TO EXPECT THE CUSTOMERS OF T HE ASSESSEE TO SUBSCRIBE THEIR SIGNATURES IN A PARTICULAR MANNER. IT IS AFFIRMED BY THE LEARNED COUNSEL THAT THE SIGNATURES ON THE VOUCHERS ARE THE NORMA L SIGNATURES OF THE RESPECTIVE PAYEES AND OBSERVATIONS/ALLEGATIONS OF THE L OWER AUTHORITIES TO THE CONTRARY ARE FALSE AND BASELESS. 10. LEARNED COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE T HROUGH ITS LETTER DATED 3 RD MARCH, 2006 ADDRESSES TO THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2000-01, HAD ALSO SUPPLIED ADDRESSES OF SOME OF THE PARTIES TO WHOM COMMISSION AS PAID AND ALSO REQUESTED THE ASSESSING OFFICER TO EXAMINE THE GENUINENESS OF THE PAYMENT OF COMMISSION IN DEPENDENTLY BY ISSUING SUMMONS UNDER S.131 OF THE ACT TO THESE PAYEES. T HE TAX AUTHORITIES DID NOT FIND ANYTHING ADVERSE ON THIS ISSUE FROM ANY OF THE PARTIES. IT IS ALSO SUBMITTED THAT THE LOWER AUTHORITIES WERE NOT JUSTIFIE D IN STATING THAT THE AFFIDAVITS OF THE REGIONAL MANAGERS ARE IRRELEVANT. IT IS SUBMITTED THAT THE REGIONAL MANAGERS ARE THE FUNCTIONAL HEADS OF THE RESP ECTIVE REGIONS FALLING WITHIN THEIR ASSIGNED AREA. AN AFFIDAVIT IS A GOOD E VIDENCE IN LAW AND EVEN THE CIVIL PROCEDURE CODE REQUIRES AFFIDAVITS TO BE FILED B Y BOTH THE PARTIES TO THE PROCEEDINGS. HE SUBMITTED THAT AN AFFIDAVIT CANNOT BE REJECTED OUTRIGHT AS A SELF SERVING DOCUMENT, UNLESS THE DEPARTMENTAL AUTHORITI ES CALL FOR THE DEPONENTS IN ORDER TO CROSS EXAMINE THEM WITH REFERENCE TO THE AVERMENTS MADE BY THEM IN THE RESPECTIVE AFFIDAVITS. HE PLACED R ELIANCE ON THE DECISION OF THE APEX COURT IN MEHTA PARIKH (30 ITR 180) IN SU PPORT OF THIS PROPOSITION. 11. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMPARABLE CASES CITED BY THE ASSESSEE ARE INDEED COMPARABLE AND ARE RELEVANT. ELABORATING THE FACTUAL POSITION IN THIS BE HALF, HE SUBMITTED THAT EVEN THOUGH IN THE CASE OF PATEL ROADWAYS LTD., IN THEIR AU DITED PRINTED FINANCIAL ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 8 ACCOUNTS, EXACT AMOUNT OF COMMISSION PAYMENT HAS NOT BEEN DISCLOSED, THE FACT OF PAYMENT OF COMMISSION BY THE SAID COMPANY IS ADMI TTED INASMUCH AS THE FREIGHT IS DISCLOSED IN THE AUDITED ACCOUNTS NET OF CO MMISSION PAYMENTS, WHICH CLEARLY INDICATES THAT THE COMPANY IS ADMITTEDLY PAYING COMMISSION, AND IF NECESSARY, THE ASSESSING OFFICER COULD HAVE VERIFIED THE QUANTUM OF COMMISSION PAID BY THAT COMPANY BY REFERENCE TO THE ASSESSM ENT RECORDS OF THAT COMPANY ALREADY AVAILABLE WITH THE DEPARTMENT. AS FOR ABC INDIA LTD, THE DATA FURNISHED WERE IN RESPECT OF TWO FINANCIAL YEARS CO RRESPONDING TO ASSESSMENT YEARS 2000-01 AND 2001-02 AND THE DATA FOR TH E OTHER YEARS COULD HAVE BEEN OBTAINED BY THE ASSESSING OFFICER HIMSELF WITH REFERENCE TO THE AST RECORDS OF THAT COMPANY. THE DATA FURNISHED BY THE ASSESSE E FOR THE TWO YEARS CLEARLY PROVE THAT THE SAID COMPANY ALSO USED TO PAY COMM ISSION AND THE RANGE OF PAYMENT OF COMMISSION BY THAT COMPANY WAS 1.23% IN A SSESSMENT YEAR 2000-01 AND 1.57% IN ASSESSMENT YEAR 2001-02. AS AGAIN ST THIS, TAKING US THROUGH THE STATEMENT FILED GIVING INFORMATION FOR THE LAST 25 YEARS, IT WAS SUBMITTED, THE PERCENTAGE OF COMMISSION PAYMENTS IN THE CA SE OF THE ASSESSEE COMPANY IS FAR LOWER THAN THAT OF ABC INDIA LTD. IT IS FURTHER SUBMITTED THAT THE ASSESSING OFFICER WAS NOT CORRECT AND JUSTIFIED IN ALLEG ING THAT THE ASSESSEE COMPANY ITSELF HAS CONCEDED THAT THE CASE OF SRI RAMDAS MO TOR TRANSPORT LTD. IS NOT COMPARABLE, SINCE ASSESSEES CASE HAS ALWAYS BEEN THAT TH E CASE OF THE SAID COMPANY WAS COMPARABLE. WHAT WAS HOWEVER STATED BEF ORE THE LOWER AUTHORITIES WAS THAT SINCE SRI RAMDAS TRANSPORT LTD. ALSO DEALS IN SALE OF NEW VEHICLES AS WELL AS MANUFACTURE AND SALE OF MOTOR CAR, TH EIR TURNOVER AND PROFITS ARE NOT COMPARABLE. THE AUDITED ACCOUNTS OF THE SAID COMPANY CLEARLY SHOW THAT THEY HAVE ALSO MADE SUBSTANTIAL PAYMENTS BY W AY OF COMMISSION. THE PERCENTAGE OF COMMISSION PAYMENTS MADE BY THAT COMPAN Y IS IN THE RANGE OF 7.2 TO 7.38 OF THE AGGREGATE FREIGHT RECEIPTS, WHI CH PERCENTAGE IS FAR HIGHER THAN THAT OF THE ASSESSEE COMPANY. LEARNED COUNSEL ALSO D ISPUTED THE FINDING OF THE ASSESSING OFFICER THAT MOST OF THE ORDERS FOR TRANSP ORTATION OF CARGO WERE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 9 EXECUTED BY THE ASSESSEE COMPANY DURING THE YEARS UNDER A PPEAL, WERE BULK IN NATURE AND HAVE BEEN OBTAINED ON THE BASIS OF TENDERS INVITED BY BIG AND REPUTED INDUSTRIAL COMPANY. IT IS SUBMITTED THAT MAJ OR PORTION OF THE BUSINESS OF TRANSPORTATION CARRIED ON BY THE ASSESSEE COMPANY WAS I N THE NATURE OF RETAIL BUSINESS. ORDERS FOR TRANSPORTATION ARE RECEIVED FOR ONE OR TWO LORRIES ON DAY TO DAY BASIS. EVEN WHEN THE ASSESSEE COMPANY DEALS WIT H BIG AND REPUTED INDUSTRIAL COMPANIES, THE ASSESSEE COMPANY DID NOT ENJOY A NY MONOPOLY IN ITS FIELD OF BUSINESS SINCE EVEN BIG AND REPUTED COMPANIES EN GAGE SEVERAL TRANSPORT OPERATORS SIMULTANEOUSLY. IT IS FURTHER SUBMI TTED THAT THERE IS NO BULK ORDER FOR TRANSPORTATION, SINCE THE REPRESENTATIVES OF BIG COMPANIES HAVE THE OPTION TO ENGAGE ANY ONE OF THE TRANSPORT COMPANIES, W HICH ARE EMPANELLED BY THEM BASED UPON THE TENDERS AND IF THE ASSESSEE COMPANY DO ES NOT PAY ANY COMMISSION TO THESE REPRESENTATIVES, THEY WILL OPT TO BOO K CARGO WITH OTHER TRANSPORT COMPANIES ALREADY EMPANELLED BY THEM SIMULTA NEOUSLY. IT IS IN THE INTEREST OF BUSINESS THEREFORE, THAT THE ASSESSEE COMPANY HA S TO PAY COMMISSION EVEN IN SUCH CASES, WHERE TRANSPORTATION BUSINESS IS RECEIVED FROM BIG INDUSTRIAL COMPANIES. HE SUBMITTED THAT THE ASSESSEE HA S TO PAY COMMISSION TO KEEP THE EMPLOYEES OF THE CONSIGNOR COMPANY IN GOOD HUMOUR BY WAY OF INDUCEMENT FOR BRINGING/GRANTING TRANSPORT BUSINESS TO THE ASSESSEE COMPANY AND FOR VARIOUS OTHER INCIDENTAL PURPOSES, AND T HE LOWER AUTHORITIES WERE NOT JUSTIFIED IN BRUSHING ASIDE THIS PLEA OF THE ASSESSEE AS A SELF-SERVING STATEMENT, SINCE IT IS A WELL ESTABLISHED AND RECOGNIZED P RACTICE IN THE ASSESSEES LINE OF BUSINESS, VIZ. TRANSPORTATION BUSINESS. 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECISIONS OF THE HONBLE HIGH COURT IN ASSESSEES OWN CASES FOR EARLIER YEARS, AS WELL AS IN THE CASE OF KODANDARAMA & CO. (SUPRA) ARE CLEARLY DISTINGUISHABLE. ELABORATING THIS POINT AD DEALIN G WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KODANDARAM A & CO (SUPRA) ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 10 LEARNED COUNSEL SUBMITTED THAT IN THAT CASE BEFORE TH E HIGH COURT, THE ASSESSEE HAS MADE CONTRIBUTIONS TO THE ANDHRA PRADESH W ELFARE FUND, AS HE WAS TOLD THAT HE WOULD NOT GET THE EXPORT PERMITS UNLESS HE MADE THE CONTRIBUTIONS. THE TRIBUNAL THEREUPON FOUND THAT CO NTRIBUTION TO THE WELFARE FUND WAS A PRE-CONDITION FOR GRANT OF EXPORT PE RMITS AND AS SUCH, THE SAME WAS HELD BY THE COURT TO BE IN CONTRAV ENTION OF THE PUBLIC POLICY. THE HONBLE HIGH COURT ON THAT BASIS RE VERSED THE ORDER OF THE TRIBUNAL. SINCE IN THE PRESENT CASE, THE ASSESSE E DID NOT PAY ANY COMMISSION EITHER TO ANY GOVERNMENT DEPARTMENT/AGENCY OR TO ANY GOVERNMENT SERVANT, THE SAID DECISION OF THE HONBLE HIGH COURT IN THE CASE OF KODANDA RAMA & CO. (SUPRA) HAS NO APPLICATI ON TO THE FACTS OF THE PRESENT CASE. 13. AS FOR THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN ASSESSEES OWN CASE ( 256 ITR 701), FOR EARLIER ASSESSMENT YEARS, VIZ. 1981-82 TO 1984-85, LEARNED COUNSEL FOR THE ASSESSEE SOUGHT TO DISTINGUISH THE SAME, BY BRINGING OUT THE PECULIAR FA CTS AND CIRCUMSTANCES OF THE CASE INVOLVED IN THOSE YEARS, A ND HIGHLIGHTED THE FOLLOWING DISTINGUISHING FEATURES- I. IN THE FOUR YEARS, CONSIDERED BY THE HONBLE HIGH CO URT, THE RELEVANT PAYMENT VOUCHERS WERE SIGNED ONLY BY THE EMP LOYEES OF THE ASSESSEE COMPANY. THE VOUCHERS FOR THOSE YEARS HAD NOT BEEN SIGNED BY THE RECIPIENTS, NAMELY THE AGENTS/EMP LOYEES OF THE CUSTOMERS. THERE WERE NO DETAILS ON THESE VOUCHERS EITHER IN RESPECT OF THE TRANSACTIONS IN RELATION TO WHICH THE COMMISSION ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 11 HAD BEEN PAID BY THE ASSESSEE COMPANY OR IN RSPECT OF THE RECIPIENTS. THIS IS NOT THE CASE FOR ANY OF THE FIVE YEARS UNDER A PPEAL INASMUCH AS, ADMITTEDLY, THE PAYMENT VOUCHERS PRODUCE D IN THE COURSE OF ASSESSMENT PROCEEDINGS, SET OUT THE NAMES OF THE PAYEES, THE CONSIGNMENT NOS., THE NAMES OF THE CONS IGNORS AND CONSIGNEE, THE DATE OF CONSIGNMENT, THE FREIGHT AMO UNT, AS ALSO THE NAME OF THE RELEVANT BRANCH OF THE ASSESSEE COMP ANY, WHERE SUCH CONSIGNMENT FOR TRANSPORTATION OF GOODS WAS BOOKED. ALL THE VOUCHERS ARE DULY SIGNED BY THE RESPECTIVE PA YEES, WHOSE NAMES ARE NOTED ON EACH OF THE CONCERNED VOUCHERS. T HE ALLEGATION TO THE CONTRARY, AS MADE BY THE ASSESSING OFFICER, IN THE ASSESSMENT ORDERS, TO THE EFFECT THAT SOME OF TH E VOUCHERS DID NOT CONTAIN SIGNATURE OF THE PAYEES, IS WHOLLY A ND FACTUALLY INCORRECT. NO SUCH CASE HAS BEEN SPECIFICALLY POINT ED OUT BY THE ASSESSING OFFICER ANYWHERE IN THE ASSESSMENT ORDERS FO R ANY OF THE FIVE YEARS UNDER APPEAL. THE ASSESSEE COMPANY ASS ERTED THAT ALL THE VOUCHERS ARE DULY SIGNED BY THE RESPECTIVE P AYEES. II. IN THE REPORTED DECISION FOR THE FOUR ASSESSMENT YE ARS 1981-82 TO 1984-85, THE HONBLE HIGH COURT HAD REFERRED TO THE S TATEMENT OF THE BRANCH MANAGER OF JAIPUR BRANCH TO THE EFFECT TH AT HE DID NOT MAKE ANY PAYMENT OF COMMISSION TO THE EMPLOYEE S OF THE CONTRACTING PARTIES, AFTER HE JOINED THE JAIPUR BRANCH. REFERENCE TO THE STATEMENT OF THE JAIPUR BRANCH MANAGE R, IN THE AFORESAID JUDGMENT, APPEARS TO HAVE BEEN MADE INADV ERTENTLY ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 12 BECAUSE OF THE FACT THAT THE STATEMENT OF JAIPUR BRAN CH MANAGER HAS ALREADY BEEN REJECTED BY THE INSPECTING ASSISTA NT COMMISSIONER OF INCOME-TAX, IN THE COURSE OF PROCEEDI NGS IN RESPECT OF THAT VERY YEAR UNDER S.144B OF THE ACT. SHRI DUKHI PANDEY, THE REGIONAL MANAGER OF VARANASI BRANCH, UNDER WHOM, THE NEW MANAGER OF JAIPUR BRANCH, SHRI V.N.UPADHYAY HA D ALL ALONG BEEN WORKING AT VARANASI, HAD FILED AN AFFIDAVI T BEFORE THE IAC IN THE COURSE OF THE PROCEEDINGS UNDER S.144B OF THE ACT TO THE EFFECT THAT SHRI UPADHYAY WAS MAINLY LOOKING AFT ER THE OPERATION OF VEHICLES AT VARANASI BRANCH, AND WAS THE REFORE, NOT CONCERNED AND/OR AWARE WITH COMMERCIAL MATTER, REGARDIN G PAYMENT OF A COMMISSION WHICH WAS MADE THOROUGH SHRI L.B.ROY, A SENIOR EMPLOYEE OF THE VARANASI BRANCH UNDE R HIS (SHRI PANDEYS) SUPERVISION AND DIRECTIONS. THE STATEM ENT MADE BY THE REGIONAL MANAGER OF THE VARANASI BRANCH IN HIS AFORESAID AFFIDAVIT WAS BELIEVED BY THE IAC, WHO DIRECTED THE ITO IN HIS ORDER PASSED UNDER S.144B OF THE ACT, NOT TO MAKE ANY DISALLOWANCE BASED UPON THE STATEMENT OF SRHI V.N.UP ADHYAY. THESE FACTS ARE CLEARLY RECORDED IN PARA 7.53 OF THE A SSESSMENT ORDER DATED 7.7.1984 PASSED IN THE CASE OF THE ASSESS EE COMPANY FOR THE ASSESSMENT YEAR 1981-82 AND A COPY OF THE RELEVANT PORTION APPEARS AT PAGES 280 TO 281 OF THE PA PER/BOOK, VOL.II FILED BY THE ASSESSEE COMPANY IN RELATION TO ITA NO.430/HYD/2007 IN RESPECT OF ASSESSMENT YEAR 2000-01. IT APPEARS THAT THE ATTENTION OF THEIR LORDSHIPS OF THE HO NBLE HIGH COURT OF ANDHRA PRADESH WAS PERHAPS NOT INVITED TO THI S PORTION OF THE ASSESSMENT ORDER. SINCE THE STATEMENT OF SHRI UPADHYAY, ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 13 WAS HELD TO BE IRRELEVANT BY THE IAC THROUGH HIS DIR ECTIONS GIVEN UNDER S.144B OF THE ACT, THE SAID STATEMENT WAS NOT CONSIDERED BY THE ASSESSING OFFICER FOR THE PURPOSE OF DISALLOWAN CE OF THE COMMISSION, AND IN SUCH CIRCUMSTANCES, THE HONBLE HIG H COURT ALSO SHOULD NOT HAVE CONSIDERED THE SAID STATEMENT O F SHRI UPADHYAY FOR DRAWING ANY ADVERSE INFERENCE IN THAT YEA R AGAINST THE ASSESSEE COMPANY. III. IN EACH OF THE YEARS UNDER APPEAL, THE ASSESSEE HAD FI LED AFFIDAVITS, NUMBERING TO AS MANY AS 52 IN ASSESSMENT YEAR 2000-01; 76 IN ASSESSMENT YEAR 2001-02; 62 IN ASSESSMENT YEAR 2002-03; 6 5 IN ASSESSMENT YEAR 2003-04 AND 790 IN ASSESSMENT YEAR 2005-0 6, SWORN BY THE REGIONAL/ZONAL/DIVISIONAL/AAREA/CONTROLL ING MANAGERS, OPERATIONAL HEADS LIKE VICE PRESIDENT, AND SENIOR EXECUT IVES DECLARING INTER-ALIA ON OATH THAT THE COMMISSION PAYMENTS WERE M ADE BY THE ASSESSEE COMPANY BY WAY OF INCENTIVES TO THE EMPLOYEES/AGENTS/REPRESENTATIVES OF CUSTOMERS, WHO BROU GHT IN CARGO TO THE ASSESSEE COMPANY FOR BOOKING; AND THAT THIS WAS AN ACCEPTED NORM AND ESTABLISHED TRADE PRACTICE IN THE TRANSPORT BUSI NESS AND THAT WITHOUT SUCH PAYMENT, IT WAS NOT POSSIBLE TO SURVIVE IN THE TRANSPORT LINE OF BUSINESS. AS AGAINST THIS POSITION IN THE YEARS UNDER APPEAL, NO SU CH AFFIDAVITS HAVE BEEN FILED BY THE ASSESSEE COMPANY EARLIER IN RELAT ION TO THE ASSESSMENT PROCEEDINGS IN ANY OF THE FOUR YEARS CONSIDERED BY THE HONBLE HIGH COURT EARLIER IN ASSESSEES OWN CASE (256 ITR 7 01). ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 14 14. SO ALSO, IT IS PLEADED THAT THE DECISIONS RELIED UPON BY THE LOWER AUTHORITIES IN SUPPORT OF THEIR CONCLUSIONS ARE CLEARLY D ISTINGUISHABLE. HE HAS DWELT AT LENGTH BRINGING OUT THE POINTS OF DISTINCTIO N IN THIS BEHALF. 15. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUG H LARGE NUMBER OF AFFIDAVITS HAVE BEEN FILED BY THE ASSESSEE DUR ING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEARS UNDER APPEAL, AS STATED ABOVE, THE SAME WERE ARBITRARILY AND INCORRECTLY REJECTED BY THE ASSESSING OFFICER MERELY ON THE GROUND THAT THEY ARE MERELY SELF-SERVING STATEMENTS, WH ICH HAVE NO EVIDENTIARY VALUE AND COULD NOT BE TREATED AS PROPER EVIDENCE, UNL ESS THE CONTENTS THEREOF WERE BASED ON PROVEN FACTS. HE SUBMITTED BY THE VERY N ATURE, EVERY AFFIDAVIT IS A SELF-SERVING STATEMENT, BUT HAVE THE EVIDENTIARY V ALUE AS RECOGNIZED AND EMPHASIZED BY THE COURTS IN SEVERAL CASES. HE VEHEMENTL Y DISPUTED THIS STAND OF THE LOWER AUTHORITIES IN BRUSHING ASIDE THE EVIDENTIARY VALUE OF THE AFFIDAVITS BY TAKING US THROUGH THE PROVISIONS OF S.3(3 ) OF THE GENERAL CLAUSES ACT, 1897 AND RULE 1 OF ORDER 19 OF THE CIVIL PROCEDU RE CODE, 1908 AND PLACED STRONG RELIANCE ON THE FOLLOWING DECISIONS- (A) MEHTA PARIKH & CO. V/S. CIT (30 ITR 180)-SC (B) UNION OF INDIA & ANR. V/S. DELHI HIGH CORUT BAR ASSOCIAT ION & ORS.(2002) 4 SCC 275(SC) (C) SALEM ADVOCATES BAR ASSOCIATION V/S. UNION OF INDIA(2003) 1 SCC 49(SC) 16. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN TH E CASE OF ASSESSEE COMPANY PAYMENT OF COMMISSION HAS ALL ALONG BEEN A CCEPTED AND ALLOWED BY THE DEPARTMENT AS BUSINESS EXPENDITURE, BUT FOR SMALL DISALLOWANCES IN SOME OF THE YEARS, INCLUDING FOR THE FOUR YEARS FOR WHICH MATTER REACHED THE JURISDICTIONAL HIGH COURT, WHICH DECIDED THE ISSUE IN FAVO UR OF THE REVENUE. AS SUCH, IT IS PLEADED THAT CONSIDERING THE STAND TAKEN BY T HE REVENUE FOR MOST OF ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 15 THE YEARS IN THE PAST, AND THE DECISION OF THE JURISDICTI ONAL HIGH COURT WAS RENDERED AGAINST THE ASSESSEE CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE RELEVANT FOUR YEARS, WAS DISTINGUISHABLE FROM T HE FACTS FOR THE YEARS UNDER CONSIDERATION IN THESE APPEALS, THE COMMISSION PAY MENTS FOR THE YEARS UNDER APPEAL HAVE TO BE ACCEPTED AND ALLOWED AS BUSINE SS EXPENDITURE. IT IS SUBMITTED IN THIS BEHALF THAT EVEN THOUGH PRINCIPLES OF RES JUDICATA DO NOT APPLY TO INCOME-TAX PROCEEDINGS, IT IS SETTLED POSITION OF LAW THAT UNLESS FACTS AND CIRCUMSTANCES IN THE SUBSEQUENT YEAR DIFFERENT, THE EARLIE R DECISIONS ON THE SAME POINT IN THE CASE OF THE SAME ASSESSEE CANNOT BE BRUSH ED ASIDE. ON THE MERITS OF ADMISSIBILITY OF DEDUCTION IN RESPECT OF COMMISSI ON PAYMENTS, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY RELIED ON THE DE CISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V/S SIGMA PAINTS LTD, (188 ITR 6) AND ELABORATING THE FACTS OF THAT CASE, SUBMITTED THAT FACTS AND CIRCUMSTAN CES OF THAT CASE ARE MORE OR LESS SIMILAR TO THE CASE OF THE ASSESSEE AND IT SQUA RELY APPLIES TO THE FACTS OF THE PRESENT CASE. HE ALSO PLACED STRONG RELIANCE ON THE FOLLOWING DECISIONS, WHICH ACCORDING TO HIM, SQUARELY COVERS THE ISSUE IN FAVOUR OF THE ASSESSEE. (A) CIT V/S. GOODLASS NEROLAC PAITNS LTD. (188 ITR 1)-BOM (B) DR.G.G.JOSHI V/S. CIT(209 ITR 324)-GUJ. (C) CIT V/S/ASK RATHINASAMY NADAR (212 ITR 527)-MAD. (D) CIT V/S. MILLSA STORES TRADING CO. INDIA PVT. LTD. (19 84) 18 TAXMAN 85(BOM) (E) CIT V/S. HOECHST DYUES & CHEMICALS LTD. (184) 17 TAXMAN 389(BOM) (F) APL INDIA PVT. LTD. V/S. DCIT(2010)96 ITD 227(MUM) (G) SAGA DEPARTMENTAL STORES LTD. V/S. CIT(325 ITR 324(DE L) (H) CIT V/S. PRINTERS HOUSE PVT. LTD. (23010)188 TAXMAN 70( DEL) ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 16 THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE VOLUMINOUS PAPER- BOOKS WHICH INTER-ALIA CONTAINED ALL THE AFFIDAVITS IN RELATION TO THE ENTIRETY OF COMMISSION PAYMENTS MADE BY IT IN EACH OF THE RELEVANT Y EARS UNDER APPEAL,. AND PHOTOCOPIES OF SOME OF THE RECEIPTED VOUCHERS BY WAY OF SAMPLE IN EACH OF THE RELEVANT YEARS. IT IS SUBMITTED THAT THE TAX AUTH ORITIES HAVE NOT POINTED OUT ANY SPECIFIC DEFECT WHATSOEVER IN ANY OF THE VOUCHERS E VIDENCING PAYMENT OF COMMISSION MADE BY THE ASSESSEE COMPANY IN ANY OF THE YEARS UNDER APPEAL, BUT MADE SWEEPING REMARKS IN GENERAL DRAWING ADVERSE I NFERENCES, AS DISCUSSED ABOVE, AGAINST THE ASSESSEE. 17. REFERRING TO THE ASSESSMENT ORDER DATED 31.3.200 4 PASSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2001-02 UNDER S.14 3(3), LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE OBSERVATIONS OF THE ASSESSING OFFICER THAT FROM THE VOUCHERS OF COMMISSION PAYMENTS PRO DUCED BY THE ASSESSEE COMPANY AND EXAMINED BY HIM, IT WAS FOUND THAT I N CERTAIN CASES COMMISSION WAS PAID IN THE RANGE OF 11% TO 32.84% OF TH E FREIGHT AMOUNTS NOTED IN THE ACCOMPANYING CONSIGNMENT NOTES; THAT INSTANCE S OF SINGLE PAYMENT OF COMMISSION IN RESPECT OF SEVERAL CONSIGNMENTS BOO KED FROM DIFFERENT CLIENTELES WERE NOTED; AND THAT APPARENTLY PAYEES COULD NOT BE EMPLOYEES OF SO MANY DIFFERENT CUSTOMERS, ARE ARBITRARY , INCORRECT, BASELESS AND FALSE. EVEN THOUGH ASSESSEE REQUESTED VIDE ITS LETTER DATED 21 ST APRIL, 2004 ADDRESSED TO THE ASSESSING OFFICER, SOON AFTER THE RECEIPT O F THE ASSESSMENT ORDER DATED 3ST MARCH, 2004, REQUESTED THE ASSESSING OFFICE R TO GIVE IT COPY OF THE STATEMENT ALLEGEDLY PREPARED BY THE ASSESSING OFFICER AND KEPT ON THE ASSESSMENT RECORDS, GIVING DETAILS OF PAYMENT OF COMMISSION IN THE RANGE OF 11% TO 32.84% OF THE FREIGHT AMOUNTS, THE ASSESSING OFF ICER DID NOT GIVE ANY REPLY TO THE SAID LETTER. IT IS SUBMITTED IN THIS CO NTEXT THAT THE ASSESSEE PAID MINIMUM LEVEL COMMISSION FOR SECURING THE TRANSPORT BUS INESS AND THE COMMISSION PAID IS NOT AT ALL DISPROPORTIONATE TO THE FREIGHT RECEIVED IN RESPECT ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 17 OF THE RELEVANT CONSIGNMENTS AS NOTED IN THE ACCOMPANYING NOTES; AND THERE WAS NEVER AN OCCASION WHATSOEVER WHEN SINGLE PAYMENT OF CO MMISSION AS MADE IN RESPECT OF SEVERAL CONSIGNMENTS BOOKED FORM DIFFE RENT CLIENTELE. 18. REFERRING TO THE ASSESSMENT ORDER DATED 31.3.200 4 PASSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2001-02 UNDER S.14 3(3), LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE OBSERVATIONS OF THE ASSESSING OFFICER THAT FROM THE VOUCHERS OF COMMISSION PAYMENTS PRO DUCED BY THE ASSESSEE COMPANY AND EXAMINED BY HIM, IT WAS FOUND THAT I N CERTAIN CASES COMMISSION WAS PAID IN THE RANGE OF 11% TO 32.84% OF TH E FREIGHT AMOUNTS NOTED IN THE ACCOMPANYING CONSIGNMENT NOTES; THAT INSTAN CES OF SINGLE PAYMENT OF COMMISSION IN RESPECT OF SEVERAL CONSIGNMENTS BOO KED FROM DIFFERENT CLIENTELES WERE NOTED; AND THAT APPARENTLY PAYEES COULD NOT BE EMPLOYEES OF SO MANY DIFFERENT CUSTOMERS, ARE ARBITRARY , INCORRECT, BASELESS AND FALSE. EVEN THOUGH ASSESSEE REQUESTED VIDE ITS LETTER DATED 21 ST APRIL, 2004 ADDRESSED TO THE ASSESSING OFFICER, SOON AFTER THE RECEIPT O F THE ASSESSMENT ORDER DATED 3ST MARCH, 2004, REQUESTED THE ASSESSING OFFICE R TO GIVE IT COPY OF THE STATEMENT ALLEGEDLY PREPARED BY THE ASSESSING OFFICER AND KEPT ON THE ASSESSMENT RECORDS, GIVING DETAILS OF PAYMENT OF COMMISSION IN THE RANGE OF 11% TO 32.84% OF THE FREIGHT AMOUNTS, THE ASSESSING OFF ICER DID NOT GIVE ANY REPLY TO THE SAID LETTER. IT IS SUBMITTED IN THIS CO NTEXT THAT THE ASSESSEE PAID MINIMUM LEVEL COMMISSION FOR SECURING THE TRANSPORT BUS INESS AND THE COMMISSION PAID IS NOT AT ALL DISPROPORTIONATE TO THE FREIGHT RECEIVED IN RESPECT OF THE RELEVANT CONSIGNMENTS AS NOTED IN THE ACCOMPANYIN G NOTES; AND THERE WAS NEVER AN OCCASION WHATSOEVER WHEN SINGLE PAYMENT OF CO MMISSION AS MADE IN RESPECT OF SEVERAL CONSIGNMENTS BOOKED FORM DIFFE RENT CLIENTELE. 19. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER FOR THE YEARS UNDER ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 18 APPEAL, AND SUBMITTED THAT NO PART OF THE COMMISSION PA YMENT CLAIMED BY THE ASSESSEE FOR ANY OF THE YEARS UNDER APPEAL, IS ALLOWABLE . EVEN OTHERWISE, HE SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE ALL THE VOUCH ERS EVIDENCING COMMISSION PAYMENTS IN RESPECT OF EACH OF THE RELEVANT YEA RS AND THAT THE VOUCHERS MAINTAINED BY THE ASSESSEE IN RESPECT OF COMMISSION P AYMENT ARE SELF-MADE AND CONTAIN SEVERAL SUSPICIOUS FEATURES AND DO NO T INFUSE CONFIDENCE AS TO THE GENUINENESS OF THESE COMMISSION PAYMENTS IN QUESTI ON, WHICH ARE ALL ALONG MADE IN CASH. IN THIS BEHALF, HE SUBMITTED THAT ADDRESSES OF THE PAYEES ARE NOT AVAILABLE IN THE SELF MADE VOUCHERS AND OTHER DOCUMENTS PRODUCED ON BEHALF OF THE ASSESSEE COMPANY. SOME OF THE VOUCHERS DO NOT CONTAIN THE SIGNATURES OF THE PAYEES. IF THE PAYMENTS ARE GENUINE, THE ASSESSEE SHOULD HAVE FURNISHED CONFIRMATION LETTERS FROM THE PAYEES GI VING THEIR FULL ADDRESS. THE SIGNATURES OF THE PAYEES ARE IN MOST CASES MERE SCRIBBLI NG AND IT IS QUITE POSSIBLE THAT THE EMPLOYEES OF THE ASSESSEE COMPANY, WHO PR EPARED THE VOUCHERS, THEMSELVES SIGNED THE VOUCHERS AS PAYEES. HE FUR THER SUBMITTED THAT AFFIDAVITS OF THE REGIONAL MANAGERS FILED BY THE ASSESSEE COMPANY ARE STEREO TYPED IN NATURE. JUDICIALLY IT HAS BEEN HELD T HAT THE AFFIDAVITS CANNOT BE TREATED AS PROPER EVIDENCE UNLESS THE CONTENTS ARE BASED O N PROVED FACTS. THE SELF SERVING AFFIDAVITS HAVE NO EVIDENTIARY VALUE. ON THE ADMISSIBILITY AND EVIDENTIARY VALUE OF THE AFFIDAVITS FILED BY THE AS SESSEE, THE LEARNED DEPARTMENTAL REPRESENTATIVE REFERRED TO THE DECISION OF THE KANHAIYA LAL DOSHI V/S. ASSISTANT COMMISSIONER OF INCOME-TAX(1996)56 TTJ 290 7 (TRIB-JAIPUR) AND OF THE ALLAHABAD HIGH COURT IN THE CASE OF SRI KRISHNA V/S. CIT(142 ITR 618). 20. THE LEARNED DEPARTMENTAL REPRESENTATIVE DISPUTE D THE TRADE PRACTICE OF COMMISSION PAYMENTS AND THE COMPARABLE CASES CITED BY THE ASSESSEE AND SUBMITTED THAT THE SO CALLED COMPARABLE CASES OF M/S. PATEL ROADWAYS LTD., M/S. ASSOCIATED ROAD CARRIERS LTD., M/S. A BC INDIA LTD AND M/S. SRI RAMDAS MOTOR TRANSPORT LTD. ARE NOT RELEVANT. MO ST OF THE CASES ARE NOT ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 19 COMPARABLE. IN ANY EVENT, HE SUBMITTED THAT THE PERCE NTAGE OF COMMISSION PAYMENT BY THE ASSESSEE IS EXCESSIVE AS MOST OF THE ORDERS FO R TRANSPORTATION EXECUTED BY THE ASSESSEE COMPANY ARE BULK IN NATURE AND T HESE HAVE BEEN OBTAINED ON THE BASIS OF TENDERS CALLED BY BIG AND REPU TED INDUSTRIAL COMPANIES. THEREFORE, ACCORDING TO HIM, THERE WAS NO NEED TO PAY THE SECRET COMMISSION TO THE AGENTS/EMPLOYEES OF THE CONSIGNOR. HE ALSO DISPU TED THE ARGUMENT OF THE ASSESSEE COMPANY THAT IT HAS TO KEEP THE EMPLOYEES OF THE CONSIGNORS IN GOOD HUMOUR BY WAY OF INDUCEMENT FOR BRINGING/GRANTI NG TRANSPORT BUSINESS TO THE ASSESSEE COMPANY IN PREFERENCE TO OTHER TRANSPORT CARR IES; TO SECURE EARLY PAYMENTS OF ITS BILLS, TO MINIMIZE CLAIMS OF ITS CUSTOMERS FOR DELAYS AS WELL AS TO SECURE AMICABLE SETTLEMENT OF CLAIMS ON ACCOUNT OF DAMAG ES SUFFERED TO THE CARGO IN THE COURSE OF LOADING, UNLOADING AND TRANSPORT ATION FROM ONE PLACE TO ANOTHER, ON THE GROUND THAT IT IS ONLY A SELF-SERVING STATEMENT AND IS NOT SUPPORTED BY ANY EVIDENCE AND SUCH A STAND IS NOT ACCEPTAB LE. HE ALSO PLEADED THAT PAYMENT COMMISSION BY THE ASSESSEE COMPANY IS OPPOSED T O PUBLIC POLICY, AS HELD BY THE HONBLE ANDHRA PRADESH HIGH COURT IN CIT V/S. KODANDARAMA & CO.( 144 ITR 395). HE ALSO RELIED ON THE DECISION O F THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1981-82 TO 19 84-85, REPORTED IN 256 ITR 701 IS AGAINST THE ASSESSEE COMPANY A ND EMPHASIZED THAT IT WAS HELD THEREIN IN NO UNCERTAIN TERMS THAT IT IS TH E DUTY OF THE ASSESSEE TO PROVE THE GENUINENESS OF PAYMENTS. THE ASSESSEE COMPANY FA ILED TO DISCHARGE ITS ONUS AND PROVE THE IDENTITY OF THE PAYEES, AS WELL AS PROVE THE GENUINENESS OF PAYMENTS, SINCE THE PAYMENT VOUCHERS DID NOT CONTAI N THE ADDRESSES OF THE PAYEES. THE DECISION OF THE HONBLE HIGH COURT HAS AL SO REACHED FINALITY WITH THE DISMISSAL OF SLP. IN THIS CONNECTION, HE DID NOT FIN D MERIT IN THE POINTS OF DISTINCTION BROUGHT OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION AS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE CONSIDERED BY THE HONBLE HIGH COURT IN THE REPORTED DE CISION, AND SUBMITTED THAT THOSE DISTINGUISHING FEATURES ARE NOT MATERIAL EN OUGH TO DEVIATE FROM THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 20 VIEW TAKEN BY THE HONBLE HIGH COURT TO ACCEPT THE COMM ISSION PAYMENTS CLAIMED BY THE ASSESSEE IN THE YEARS UNDER APPEAL. 21. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHE R SUBMITTED THAT THE FACT THAT DURING THE LAST SEVERAL YEARS, THE DEPART MENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE WITH REGARD TO COMMISSION PAYMENTS IS I RRELEVANT AS THERE IS NO RES JUDICATA IN ASSESSMENT PROCEEDINGS AND AL SO SINCE, FOR THE YEARS UNDER APPEAL, THE ASSESSEE COMPANY COULD TO FURNISH THE A DDRESSES OF THE RECIPIENTS OR PRODUCE SUCH PERSONS BEFORE THE ASSESSING OFFICER , WHICH PROVED THE FACT THAT THE ENTIRE COMMISSION PAYMENT WAS IN THE N ATURE OF SECRET COMMISSION AND THEREFORE, NOT ADMISSIBLE. FURTHER, IT I S SUBMITTED THAT THE EFFECT OF INSERTION OF EXPLANATION TO S.37(1) OF THE ACT WITH RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 1962-63 IS ALSO TO BE CONSIDERED IN T HE CONTEXT OF ASSESSEE COMPANYS CLAIM AS TO THE ALLOWABILITY OF SECRET COMM ISSION. THE DECISIONS OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF G.A.VASANT (265 ITR 481) AND OF THE HONBLE ORISSA HIGH COURT IN THE CASE OF TARINI TARPULINE PRODUCTIONS V/S. CIT (254 ITR 495) ARE IN FAVOUR OF TH E DEPARTMENT, SINCE IN THOSE CASES DISALLOWANCE OF ENTIRE SECRET COMMISSION WAS UPHELD . THE ASSESSEES COMPANYS OF OFFER OF DISALLOWANCE OF PART OF COMM ISSION OF A SUM OF RS.70 LAKHS FOR THE ASSESSMENT YEAR 20001-01 AND RS.80,0 0,000 FOR EACH OF THE ASSESSMENT YEARS 2003-04 AND 2004-05, THROUGH ITS LET TER DATED 19.1.2006 IS UNILATERAL. ASSESSEES CONTENTION THAT THE ADDL. COMM ISSIONER AND CIT AGREED TO THE PROPOSED DISALLOWANCE BY THE ASSESSEE COMPANY IN ASSESSMENT YEAR 2000-01 IS NOT CORRECT, AND THE ASSESSEES UNILATERAL OFFER OF DISALLOWANCE CANNOT BE CONSTRUED AS CONSENT BY THE DEPARTMENTAL OFFICE RS, AND IN ANY CASE IT IS FOR THE ASSESSING OFFICER TO DECIDE WHETHER THE AMOUNTS IN QUESTION ARE DISALLOWABLE OR NOT. IN RELATION TO THE APPEAL FOR THE ASSESSMENT YEAR 2001 - 02, HE SUBMITTED THAT AN ADDITIONAL QUESTION ARISES ON ACCOUNT VIOLATION OF THE PROVISIONS OF S.46A AS THE CIT(A) WAS NOT JUSTIFIED IN LAW IN ADMITTING THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 21 ADDITIONAL EVIDENCE IN THE FORM OF AFFIDAVITS OF REGI ONAL MANAGER ETC., WHICH WERE FILED BY THE ASSESSEE COMPANY FOR THE FIRST TIME IN RELATION TO THE ASSESSMENT YEAR 2001-02, BEFORE THE CIT(A), AND THE CIT (A) ADMITTED THOSE AFFIDAVITS AS EVIDENCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER IN TERMS OF RULE 46A. 22. HE STRONGLY RELIED ON THE DECISIONS OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF KODANDARAMA & CO. (SUPRA) AND IN ASSESSEES OW N CASE(256 ITR 701) FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85 AND DISP UTED THE POINTS OF DISTINCTION BROUGHT FORTH BY THE LEARNED COUNSEL FOR T HE ASSESSEE AND SUBMITTED, IN ANY EVENT, THAT THEY ARE NOT VALID OR GOOD ENOUG H TO IGNORE THE BINDING DECISION OF THE JURISDICTIONAL HIGH COURT ON THIS VERY I SSUE AND IN ASSESSEES OWN CASE. ON THE ADMISSIBILITY OF DEDUCTION IN RESPECT OF COMMISSION PAYMENTS, THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLACED RE LIANCE ON THE DECISION S OF GUJARAT HIGH COURT IN CIT V/S. NAVSARI COTTON AND SILK MILLS LTD. (135 ITR 546) AND OF THE BOMBAY HIGH COURT IN CIT VS. TARAPORV ALA SONS CO. PVT. LTD. (239 ITR 319). 23. THE LEARNED COUNSEL FOR THE ASSESSEE, IN HIS REPLY, DISPUTED THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE DID NOT PRODUCE ALL THE VOUCHERS. HE SUBMITTED THAT THE ALL EGATION MADE ON BEHALF OF THE REVENUE IS WHOLLY INCORRECT AND STATED THAT THER E ARE MORE THAN FIFTY LAKH VOUCHERS EVIDENCING COMMISSION PAYMENTS IN THE RELEVANT Y EARS UNDER APPEAL BEFORE THE TRIBUNAL AND IN THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSEE HAD TAKEN BEFORE THE ASSESSING OFFICER ALL ITS BOOKS OF A CCOUNTS ALOGNWITH THE RELEVANT VOUCHERS AND DOCUMENTS THROUGH TRUCK LOADS, BUT THE ASSESSING OFFICER EXAMINED SOME OF THE VOUCHERS BY WAY OF SAMPLE, AT HIS O WN OPTION BY WAY OF PICK AND CHOOSE METHOD. SIMILARLY, ALL THE VOUCHERS WER E AGAIN PRODUCED ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 22 BEFORE THE LEARNED CIT(A) WHO ALSO EXAMINED THE VOUCH ERS BY WAY OF SAMPLE, AT HIS OPTION, BY PICK AND CHOOSE METHOD. 24. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO DISPUTE D THE REMARK OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE COMM ISSION PAYMENTS HAVE ALL ALONG BEEN MADE IN CASH, AND SUBMITTED THAT IT WAS ONLY THE AMOUNTS OF COMMISSION WHICH WERE BELOW THE LIMITS SPECIFIED UNDER S.4 0A(3) WHICH WERE MADE IN CASH, WHILE OTHER PAYMENTS OF COMMISSION WERE AL WAYS MADE THROUGH BANKING CHANNEL. IN FACT, IT IS SUBMITTED, THAT DETA ILS OF SUCH PAYMENTS MADE THROUGH BANKING CHANNEL IN THE FINANCIAL YEAR RELEVAN T TO ASSESSMENT YEAR 2005-06, APPEAR AT PAGE 45 OF THE PAPER-BOOK FILED FOR THAT YEAR, AND EVEN THOSE PAYMENTS AMOUNTING TO RS.14,52,375 WERE DISALLO WED BY THE ASSESSING OFFICER AND THE SAID DISALLOWANCE WAS CONFIRMED BY THE CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE ALSO DISPUTED THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE ASSESSMENT YEAR 2001 -02 WITH REGARD TO VIOLATION OF THE PROVISIONS OF RULE 46A INASMUCH AS THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND THE ASSESSING OFFICER INDEED EXAMINED THE ADDITIONAL EVIDENCE IN QUESTION AND SUBMI TTED HIS REPORT, AFTER EXAMINING WHICH, THE CIT(A) DETERMINED THE ISSUE. 25. DISTINGUISHING THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF KANHAIYA LAL DOSHI (SUPRA) RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE LEARNED COUNSEL FOR THE ASSESSEE STATE D THAT THAT DECISION WAS RENDERED BY THE TRIBUNAL CONSIDERING PECULIAR FACTS A ND CIRCUMSTANCES OF THAT CASE, WHEREIN THE AFFIDAVIT IN THE COURSE OF ASSESSMEN T PROCEEDINGS WAS PRECEDED BY A STATEMENT RECORDED ON OATH UNDER S.132(4 ) OF THE ACT DURING THE COURSE OF SEARCH PROCEEDINGS UNDER S.132 OF THE ACT, WHEN HUGE AMOUNT OF CASH WAS SEIZED FROM THE POSSESSION OF THE ASSESSEE. IT WAS TAK ING NOTE OF THE CONTRADICTORY STATEMENTS IN THE STATEMENT UNDER S.132(4 ) AND THE AFFIDAVIT FILED ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 23 IN THE COURSE OF ASSESSMENT PROCEEDINGS, IN THE LIGHT OF T HE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE IT, THE JAIPUR BENCH OF THE TRIBUNAL HELD THAT ALTHOUGH AS A GENERAL RULE, IF THE DEPOSITION MADE IN THE AFFIDAVITS IS NOT TESTED THROUGH CROSS-EXAMINATION, THE SAME SHOULD BE ACCEPTED, BUT BEFORE ACCEPTING ANY DEPOSITION CONTAINED IN AN AFFIDAVIT, IT WAS ALWAYS NECESSARY THAT THE DEPOSITION SHOULD INSPIRE CONFIDENCE, AND THAT THE SAME SHOULD APPEAL TO THE REASONS OF A PRUDENT MAN. IN THE CIRCUMSTANCES, WHIL E THERE CAN BE NO QUARREL WITH REGARD TO THE PROPOSITION LAID DOWN BY THE JAIPUR BENCH OF THE TRIBUNAL IN THAT CASE, CONSIDERING PECULIAR FACTS AND CIRCU MSTANCES OF THAT CASE WHICH DID NOT INSPIRE CONFIDENCE IN THE AFFIDAVIT FILED IN THAT CASE AND THEREFORE THE DECISION WENT AGAINST THE ASSESSEE THEREIN, THE DECISI ON OF THE SAID CASE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. HE A LSO DISTINGUISHED THE OTHER CASE LAW RELIED UPON BY THE LEARNED DEPARTMENTA L REPRESENTATIVE NOTED ABOVE. 26. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE ISSUE OF APPLICABILITY OF A PRECEDENT, INVITED OUR SPECIFIC ATTENTION TO THE FOLL OWING OBSERVATIONS OF THE HONBLE APEX COURT TIN COMMISSIONER OF CENTRAL EXCISE, BANGALORE V/S. SRIKUMAR AGENCIES (2009) 1 SCC 469(SC)- 4. COURTS SHOULD NOT PACE RELIANCE ON DECISIONS WI THOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FACT SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF COURT S ARE NEITHER TO BE READ AS EUCLIDS THEOREMS NOR AS PROVISIONS OF THE STATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT. THESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN WHICH THEY APPEAR TO HAVE BEEN STATED. J UDGMENTS OF COURTS ARE NOT TO BE CONSTRUED AS STATUTES. TO INTERPRET W ORDS, PHRASES AND PROVISIONS OF A STATUTE, IT MAY BECOME NECESSARY FO R JUDGES TO EMBARK INTO LENGTHY DISCUSSION BUT THE DISCUSSION IS MEANT TO EXPLAIN AND NOT TO DEFINE. JUDGES INTERPRET STATUTES, THEY DO NOT INT ERPRET JUDGMENTS. THEY INTERPRET WORDS OF STATUE; THEIR WORDS ARE NOT TO B E INTERPRETED AS STATUTES. IN LONDON GRAVING DOCK CO. LTD. V. HORTO N 1951 AC 737 AT P.761 LORD MAC DERMOT OBSERVED: THE MATTER CANNOT OF COURSE, BE SETTLED MERELY BY T REATING THE IPSISSIMA VERTRA OF WILES, J AS THOUGH THEY WER E PART OF AN ACT OF PARLIAMENT AND APPLYING THE RULES OF INTE RPRETATION ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 24 APPROPRIATE THERETO. THIS IS NOT TO DETRACT FROM TH E GREAT WEIGHT TO BE GIVEN TO THE LANGUAGE ACTUALLY USED BY THAT MOST DISTINGUISHED JUDGE. IN HOME OFFICER V. DORSET YACHT CO. 1970(2) ALL ER 294 LORD REID SAID, LORD ATKINS SPEECH, IS NOT TO BE TREATED AS IF I T WAS A STATUTE DEFINITION. IT WILL REQUIRE QUALIFICATION IN NEW C IRCUMSTANCES. MEGARRY, J. IN (1971) 1 WLR 1062 OBSERVED: ONE MUST NOT, OF CO URSE, CONSTRUE EVEN A RESERVED JUDGMENT OF RUSSELL L.J. AS IF IT W ERE AN ACT OF PARLIAMENT. AND, IN HERRINGTON V. BRITISH RAILWAYS BOARD 1972(2) WLR 537 LORD MORRIS SAID: THERE IS ALWAYS PERIL IN TREATING THE WORDS OF A S PEECH OF JUDGMENT AS THOUGH THEY ARE WORDS IN A LEGISLATIVE ENACTMENT, AND IT IS TO BE REMEMBERED THAT JUDICIAL UTTERANCES MAD E IN THE SETTING OF THE FACTS OF A PARTICULAR CASE. 5. CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DI FFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN T WO CASES. DISPOSAL OF CASES BY BLINDLY PLACING RELIANCE ON A DECISION IS NOT PROPER. THE FOLLOWING WORDS OF LORD DENNING IN THE MATTER O F APPLYING PRECEDENTS HAVE BECOME LOCUS CLASSICUS: EACH CASE DEPENDS ON ITS OWN FACTS AND A CLOSE SIMI LARITY BETWEEN ONE CASE AND ANOTHER IS NOT ENOUGH BECAUSE EVEN A S INGLE SIGNIFICANT DETAIL MAY ALTER THE ENTIRE ASPECT, IN DECIDING SUCH CASES, ONE SHOULD AVOID THE TEMPTATION TO DECIDE CA SES (AS SAID BY CORDOZO) BY MATCHING THE COLOUR OF ONE CASE AGAINST THE COLOUR OF ANOTHER. TO DECIDE THEREFORE, ON WHICH SIDE OF THE LINE A CASE FALLS, THE BROAD RESEMBLANCE TO ANOTHER CASE IS NOT AT ALL DECISIVE. PRECEDENT SHOULD BE FOLLOWED ONLY SO FAR AS IT MARK S THE PATH OF JUSTICE, BUT YOU MUST CUT THE DEAD WOOD AND TRIM OFF THE SID E BRANCHES ELSE YOU WILL FIND YOURSELF LOST IN THICKETS AND BRANCHES. MY PLEA IS TO KEEP THE PATH TO JUSTICE CLEAR OF OBSTRUCTIONS WHICH COULD I MPEDE IT. 6. SINCE THE FACTUAL POSITION HAS NOT BEEN ANALYZED IN DETAIL, DISPOSAL OF APPEALS BY MERE REFERENCE TO DECISIONS, WAS NOT THE PROPER WAY TO DEAL WITH THE APPEALS. THE GEGAT ALSO DOES NOT APP EAL TO HAVE DEALT WITH THE RELEVANCE AND APPLICABILITY OF ITCS CASE (SUPRA), ON WHICH STRONG RELIANCE HAS BEEN PLACED BY LEARNED SOLICITO R GENERAL. IT IS SUBMITTED THAT THE AFORESAID OBSERVATIONS OF THE HO NBLE SUPREME COURT HAD BEEN REITERATED IN THE STATE OF ORISSA V/S. SUDHA NSU SEKHAR MISRA & ORS.(AIR 1968 SC 647); PADMASUNDARA RAO(DECD) V/S. STAT E OF TAMIL NADU (255 ITR 147)(SC); BHARAT PETROLEUM CORPORATION LTD . V/S. N.R.VAIRAMANI ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 25 (2004) 8 SCC 579(SC) AND IN BIHAR SCHOOL EXAMINATION BOARD V/S. SURESH PRASAD SINHA (2009) 8 SCC 483(SC). 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE ALSO GONE THROUGH THE VOLUMINOUS PAPER-BOOKS FILED BEFORE US AND ELABORATE WRITTEN SUBMISSIONS FILED BY BOTH THE PARTIES BEFORE US. IN THESE CASES, THE ASSESSEE HAS PAID COMMISSION TO VARIOUS PERSONS AND CLAIMED AS DEDUCTION. THE CLAIM WAS NOT ALLOW ED BY THE ASSESSING OFFICER OR BY APPELLATE AUTHORITY ON THE REASON THAT THIS PAYMENT IS NOT VERIFIABLE AND THEY DOUBTED THE GENUINENESS OF THE PA YMENTS AND IT IS ALSO AGAINST PUBLIC POLICY. ACCORDING TO THE ARGUMENTS OF T HE LEARNED DEPARTMENTAL REPRESENTATIVE THIS ISSUE WAS ALREADY SETTLED BY THE JUD GEMENT OF HIGH COURT IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85 . IN THAT CASE IT WAS HELD AS FOLLOWS: 'HELD, THAT IT WAS NOT FOR THE TRIBUNAL OR FOR THE COURT TO ALLOW DISALLOWANCE SOLELY ON THE GROUND THAT IN RESPECT OF C ERTAIN PREVIOUS YEARS SUCH DISALLOWANCE WAS ALLOWED. THE RECORDS SHOW ED THAT THERE WAS A VERY SHARP INCREASE OF COMMISSION PAYMENTS FROM THE ASSESSMENT YEAR 1981-82 AND THE FACTS OF THE CASE BEFORE THE ASSESSM ENT YEAR 1981-92 AND AFTER THE ASSESSMENT YEAR 1981-82 WERE NOT SIMILAR. IT WAS THE ADMITTED CASE THAT THE PAYMENT OF SECRET COMMISSION IN QUESTION WAS SUPPORTED BY THE VOUCHERS SIGNED ONLY BY THE EMPLOY EES OF THE ASSESSEE- COMPANY AND THOSE VOUCHERS WERE NOT SIGNED BY THE EM PLOYEES OF ITS CUSTOMERS. THE PAYMENT ITSELF WAS NOT ESTABLISHED. THE DEPARTMENT TOOK A SPECIFIC STAND THAT SUCH VOUCHERS SIGNED ONLY BY THE EMPLOYEES OF THE ASSESSEE-COMPANY COULD NOT BE ACCEPTED AS GENUINE BEC AUSE ANY NUMBER OF SUCH VOUCHERS COULD BE PRODUCED BY THE ASSESSEE TO DEFRAUD THE EXCHEQUER. THIS STAND WAS SUPPORTED BY THE MANAGER O F ONE OF THE BRANCHES OF THE ASSESSEE WHO STATED THAT AFTER HE TOOK OVER AS THE MANAGER NO SECRET COMMISSION WAS PAID TO ANYONE. ALL THE REASONS STATED BY THE TRIBUNAL TO RECORD THE FINDING OF FACT W ERE TOTALLY IRRELEVANT AND PERVERSE TO THE DECISION-MAKING. THE TRIBUNAL HAD NOT ADDRESSED ITSELF TO THE RELEVANT QUESTIONS PROPERLY TO SEE WHE THER THE NECESSARY CONDITIONS EXISTED OR NOT TO ALLOW DEDUCTION UNDER S ECTION 37(1) AND WHETHER THE ASSESSEE HAD DISCHARGED THE BURDEN CAST O N IT. THEREFORE, THE FINDINGS GIVEN BY THE TRIBUNAL WERE PERVERSE AND BASED ON IRRELEVANT CONSIDERATIONS.' 28. AS SEEN FROM THE ABOVE JUDGEMENT IT IS OBSERVED T HAT THERE IS NO QUARREL WITH REGARD TO THE PROPOSITION THAT IT IS FOR THE ASSESSEE TO ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 26 DISCHARGE WHETHER ANY EXPENDITURE SHOULD BE INCURRED IN THE COURSE OF HIS BUSINESS OR TRADE AND SUCH EXPENDITURE MAY BE INCURR ED VOLUNTARILY AND WITHOUT ANY NECESSITY AND SUCH EXPENDITURE IS INCURRE D, EVEN VOLUNTARILY FOR PROMOTING THE BUSINESS INTEREST AND T O EARN PROFIT, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SUB SECTION (1 ) OF 37, THOUGH THERE IS NO COMPELLING NECESSITY TO INCUR SUCH EXPEN DITURE. IT IS ALSO OBSERVED THAT PAYMENT ITSELF NOT ESTABLISHED AND, SECONDLY IT IS NOT THE CASE OF THE ASSESSEE BEFORE THE ASSESSING AUTHORITY THAT THE PARTICULARS OF THE PERSONS TO WHOM THE AMOUNTS OF SECRET CO MMISSION WERE MADE COULD BE SUPPLIED WITHOUT DETRIMENT TO THE BUSINESS OF THE ASSESSEE HAVING REGARD TO THE NATURE OF THE BUSINESS OF T RANSPORT OF CARGO CARRIED ON BY THE ASSESSEE COMPANY. ACCORDING TO JUDGMENT T HE FINDING RECORDED BY THE TRIBUNAL, IS BASED ON NO EVIDENCE, BU T IS BASED IRRELEVANT CONSIDERATIONS. HOWEVER, THE HIGH COURT NOT D ECIDED THE ISSUE WHETHER THE PAYMENT OF COMMISSION IS OPPOSED TO PUBLIC POLICY OR NOT. FURTHER, IT WAS OBSERVED THAT THE MERE FACT THAT FOR THE ASSESSMENT YEAR 1981-82 THE ITO HAS ALLOWED THE SIMILAR CLAIM OF THE A SSESSEE CANNOT BE A GROUND TO ALLOW CLAIM COMMISSION WITHOUT EXAMINING W HETHER NECESSARY CONDITIONS EXISTED TO ALLOW ALLOWANCE UNDER SECTION 37 IN TERMS OF STATUTE OR NOT AND WHETHER THE ASSESSEE HAD DISCHARGED THE BURDEN CAST ON IT WITH REGARD TO THE SUBSEQUENT ASSESSMENT YEAR. ALLOWANCE OR DISALLOWANCE OF A CLAIM UNDER SECTION 37(1) SHOULD DEPEN D UPON EXISTENCE OR OTHERWISE OF THE FOUR CONDITIONS AS FOLLOWS: 1. THE EXPENDITURE IN QUESTION SHOULD NOT BE OF THE NATU RE DESCRIBED UNDER THE SPECIFIC PROVISIONS SS 30 TO 36 AND 80VV OF THE ACT( SECTION 80VV WAS OMITTED W.E.F. FROM 1 ST APRIL 1986) 2. THE EXPENDITURE SHOULD NOT BE OF NATURE OF CAPITAL E XPENDITURE 3. IT SHOULD NOT BE A PERSONAL EXPENDITURE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 27 4. THE EXPENDITURE HAVE BEEN LAID OUT FOR EXPENDED WH OLLY AND EXCLUSIVELY FOR THE PURPOSES BUSINESS OR PROFESSION. 29. NOW, WE WILL EXAMINE, WHETHER IN THESE YEARS TH E ASSESSEE HAS FULFILLED THE REQUIREMENT AS ENVISAGED BY THE ABO VE JUDGMENT. WE HAVE CAREFULLY GONE THOUGH THE PROVISIONS OF SECTIONS 30 TO 36. SECTION 30 RELATES TO THE ALLOWABILITY OF PAYMENT LIKE RENT , RATES, TAXES, REPAIRS AND INSURANCE FOR THE PREMISES USED FOR THE PURPOSE OF BU SINESS OR PROFESSION. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE DO ES NOT RELATE TO THE KIND OF EXPENDITURE SPECIFIED IN S.30 AND HENCE THAT SECTION IS NOT APPLICABLE. SECTION 31 IS RELATES ALLOWABILITY OF REPAI RS AND INSURANCE IN RESPECT OF MACHINERY, PLANT AND FURNITURE USED FOR THE PURPOSE OF BUSINESS. SIMILARLY, SECTION 32 IS RELATES TO ALLOWABIL ITY OF DEPRECIATION ON ASSETS USED IN BUSINESS. IN THE SAME WAY, WHILE SECTION 32 A IS RELATING TO INVESTMENT ALLOWANCE, SECTION 32AB IS RELATING TO INV ESTMENT DEPOSIT ACCOUNT. SECTION 33 DEALS WITH DEVELOPMENT REBATE, WH ILE SECTION 33A DEALS WITH DEVELOPMENT ALLOWANCE. SIMILARLY, SECTION 33AB DEALS WITH TEA DEVELOPMENT ACCOUNT, COFFEE DEVELOPMENT, RUBBER DEVELO PMENT ACCOUNT, AS AGAINST SECTION 33ABA RELATING TO SITE RESTORATION F UND. SIMILARLY, SECTION 33AC DEALS WITH RESERVES FOR SHIPPING BUSINESS. S ECTION 33B RELATES TO REHABILITATION ALLOWANCE AND SECTION 34 DE ALS WITH CONDITIONS FOR DEPRECIATION ALLOWANCE AND DEVELOPMENT REBATE. S ECTION 34A DEALS WITH RESTRICTION ON UNABSORBED DEPRECIATION AND UNABSOR BED INVESTMENT ALLOWANCE FOR LIMITED PERIOD IN CASE OF CERTAIN DOMEST IC COMPANIES. SECTION 35 DEALS WITH EXPENDITURE ON SCIENTIFIC RESEARCH. SECTION 35A DEALS WITH EXPENDITURE ON ACQUISITION OF PATENT RIGHT OR COPY RIGHT. SECTION 35AB DEALS WITH EXPENDITURE ON KNOW-HOW. SE CTION 35ABB DEALS WITH EXPENDITURE FOR OBTAINING LICENCE TO OPERATE TE LECOMMUNICATION SERVICES. SECTION 35AC DEALS WITH EXPENDITURE ON ELIGIBL E PROJECT OR ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 28 SCHEME. SECTION 35AD DEALS WITH DEDUCTION IN RESPECT OF EXPENDITURE ON SPECIFIED BUSINESS. SECTION 35B DEALS WITH EXPORT MARKET D EVELOPMENT ALLOWANCE. SECTION 35C DEALS WITH AGRICULTURAL DEVELO PMENT ALLOWANCE. SECTION 35CC DEALS WITH RURAL DEVELOPMENT ALLOWANCE. S ECTION 35CCA DEALS WITH EXPENDITURE BY WAY OF PAYMENT TO ASSOCIATIO N AND INSTITUTIONS FOR CARRYING OUT RURAL DEVELOPMENT PROGRAMMES. SECTION 35CCB DEALS WITH EXPENDITURE BY WAY OF PAYMENT TO ASSOCIATIONS AND INSTITUTIONS FOR CARRYING OUT PROGRAMMES OF CONSERVATION OF NATURAL RESOU RCES. SECTION 35D DEALS WITH AMORTIZATION OF CERTAIN PRELIMINARY EX PENSES AND 35DD DEALS WITH AMORTIZATION OF EXPENDITURE IN CASE OF AMAL GAMATION OR DE- MERGER. SECTION 35DDA DEALS WITH AMORTIZATION OF EXP ENDITURE INCURRED UNDER VOLUNTARY RETIREMENT SCHEME. SECTION 35E DEALS W ITH DEDUCTION FOR EXPENDITURE ON PROSPECTING ETC. FOR CERTAIN MINERALS. SE CTION 36 DEALS WITH OTHER DEDUCTION IN RESPECT OF PREMIUM PAID, INTER EST, ETC. 30. THE CLAIM OF PAYMENT OF COMMISSION BY THE PRESE NT ASSESSEE IS NOT QUALIFIED FOR DEDUCTION UNDER ANY OF ABOVE SECTI ONS. NOW, COMING TO NEXT QUESTION AS TO WHETHER THE EXPENDITURE IS CAPITAL EXPENDITURE OR NOT, WE ARE OF THE OPINION THE EXPENDITURE IS NOT A CAPITA L EXPENDITURE SINCE THE ASSESSEE DID NOT ACQUIRE ANY CAPITAL ASSET. 31. AS FOR THE THIRD CONDITION AS TO WHETHER THE PA YMENT IS IN THE NATURE OF PERSONAL EXPENDITURE OR NOT, AGAIN, IN OUR OPINION, THIS IS NOT THE PAYMENT RELATING TO PERSONAL BENEFIT OF ANY EMPL OYEES OR DIRECTORS OF ASSESSEE-COMPANY. BEING SO, IT IS NOT PERSONAL EXPENDITUR E. 32. NOW, WE HAVE TO SEE WHETHER THE EXPENDITURE I S INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE CASE OF SASSOON J. DAVID & CO. LTD. VS. CIT (118 ITR 261 (SC) WHEREIN HELD THAT THE EXPRESSION WHOLLY AND EXCLUSIVELY USED IN S. 10(2)(XV) DOES NOT ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 29 MEAN NECESSARILY . ORDINARILY, IT IS FOR THE ASSESSEE TO DECIDE WHETHER ANY EXPENDITURE SHOULD BE INCURRED IN THE COURSE OF HIS OR ITS BUSINESS. SUCH EXPENDITURE MAY BE INCURRED VOLUNTARILY WITHOUT ANY NECESSITY AND IT IS INCURRED FOR PROMOTING THE BUSINESS AND TO EARN PR OFITS, THE ASSESSEE CAN CLAIM DEDUCTION EVEN THOUGH THERE WAS NO COMPELLING NECESSITY TO INCUR SUCH EXPENDITURE. THE FACT SOMEBODY OTHER THAN TH E ASSESSEE IS ALSO BENEFITED BY THE EXPENDITURE SHOULD NOT COME IN T HE WAY OF AN EXPENDITURE BEING ALLOWED BY WAY OF DEDUCTION UNDER SECTION 10(2)(XV), IF IT SATISFIES OTHERWISE THE TESTS LAID DOWN BY THE LAW. 33. CONSIDERING THE ABOVE JUDGEMENT, WE FIND THAT THE JURISDICTIONAL HIGH COURT FOR THE ASSESSMENT YEARS 1981-8 2 TO 1984-85 HELD THAT THE SAID PAYMENT OF COMMISSION CANNOT BE ALLO WED AS THERE IS NO EVIDENCE FOR PAYMENT OF SUCH COMMISSION. NOW, THE ISSUE BEFORE US IS WHETHER THE ASSESSEE HAS ESTABLISHED THE PAYMENT OF COMMISSI ON BY PRODUCING THE NECESSARY EVIDENCE AS HELD BY THE JURISDICTI ONAL HIGH COURT IN THE ASSESSEES OWN CASE FOR EARLIER YEARS. THE VOUCHERS W ERE NOT SIGNED BY THE RECIPIENT. IT DOES NOT CONTAIN ANY DETAI LS REGARDING THE RECIPIENT OR PAYMENTS MADE. MOREOVER, THE ASSESSING OFFICE R EXAMINED THE MANAGER OF JAIPUR BRANCH OF THE ASSESSEE WHO STATED T HAT AFTER HE TOOK OVER AS MANAGER OF THE JAIPUR BRANCH NO PAYMENT OF SECRET COMMISSION' WAS MADE. FOR THE YEAR UNDER CONSIDERATION, THE VOUCHERS PRODUCED BY THE ASSESSEE ARE SIGNED BY THE RECIPIENT. THE Y ARE NOT THE VOUCHERS SIGNED BY THE EMPLOYEES OF THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE AFFIDAVIT FROM THE REGIONAL MANAGERS TO SHOW THAT THE COMMISSION WAS IN FACT PAID TO THE EMPLOYEES OR AGENTS O R REPRESENTATIVES OF THE PRIVATE COMPANIES, WHO BOOK THE CONSIGNMENTS. WE HAVE GONE THROUGH THE RELEVANT PORTION OF THE ASSE SSMENT ORDER FOR THE ASSESSMENT YEAR 1981-82 WHICH WAS PLACED ON RECORD AT P AGE NO. 280-281 OF THE ASSESSEE PAPER BOOK, VOLUME-II FILED IN RELATION TO ITA NO. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 30 430/HYD/07 FOR THE ASSESSMENT YEAR 2000-01. FOR THE ASSESSM ENT YEAR 1981-82 IN A PROCEEDINGS U/S 144B OF THE INCOME-TAX ACT, 1961, THE INSPECTING ASSISTANT COMMISSIONER OF INCOME TAX (IAC) REJE CTED THE STATEMENT OF THE JAIPUR BRANCH MANAGER ON THE BASIS O F THE AFFIDAVIT FILED BY SRI DUKHI PANDE REGIONAL MANAGER OF VARANA SI BRANCH, UNDER WHOM MR. V.N. UPADHYAY, THE NEW MANAGER OF JAIPUR B RANCH, HAD ALL ALONG BEEN WORKING AT VARANASI TO THE EFFECT THAT SRI UPADHYAYA WAS MAINLY LOOKING AFTER THE OPERATION OF VEHICLES AT VA RANASI BRANCH AND WAS THEREFORE, NOT CONCERNED AND/OR AWARE WITH COMMERCIA L MATTERS REGARDING PAYMENT OF COMMISSION, WHICH WAS MADE THROUGH SRI L.B. ROY, A SENIOR EMPLOYEE OF VARANASI BRACH UNDER MR. PANDEYS SUPERVISION AND DIRECTIONS. THE STATEMENT MADE BY THE REGIONAL MANAGER OF THE VARANASI BRACH IN HIS AFFIDAVIT WAS BELIEVED BY THE IAC, WHO D IRECTED THE ASSESSING OFFICER IN HIS ORDER PASSED UNDER SECTION 144B OF THE SAID ACT, NOT TO MAKE ANY DISALLOWANCE BASED UPON THE STATEMENT OF MR. UPADHYAYA. THE LEARNED AUTHORISED REPRESENTATIVE CONTE NDED THAT THE DIRECTION OF THE IAC IN THE PROCEEDINGS U/S 144B OF T HE ACT AND AFFIDAVIT FILED BY VARANASI REGIONAL MANAGER WERE INADVERTENTL Y NOT BROUGHT TO THE NOTICE OF THE HIGH COURT. IF IT IS SO, THE FINDINGS WOUL D HAVE BEEN ENTIRELY DIFFERENT. 34. IN CIT V. SIGMA PAINTS LTD. (1991) 188 ITR 06 (BOM), THEIR LORDSHIPS OF THE HON'BLE BOMBAY HIGH COURT HELD AND OBS ERVED AT PAGES 7 & 8 OF THE REPORTS AS UNDER: ' ..... SHRI PATEL, LEARNED COUNSEL FOR THE RESPONDE NT- ASSESSEE, HAS INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE HAD APPEARED AS AN INTERVENER BEFORE THE SPECIAL BENCH OF THE TRIBUNAL WHEN IT WAS CONSIDERING THE APPEALS RELATING TO FRENCH DYES AND CHEMICALS (I.) (P.) LTD. HE HAS FURTHER INVITED OUR ATTENTION TO PARAGRAPHS 24 TO 28 OF THE JUDGMENT IN THAT CASE TO ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 31 SHOW THAT THE ASSESSEE HAD PRODUCED VARIOUS DETAILS AND THE RECORDS MAINTAINED BY THE COMPANY RELATING TO THE SECRET COMMISSION PAYMENTS. VOUCHERS FOR THE AMOUNTS RECEIVED BY THE SALES OFFICER OR OTHER RESPONSIBLE PERSONS FOR THE PAYMENT OF SECRET COMMISSION WERE AVAILABLE. THE DETAILS OF SALES TRANSACTIONS ENTERED INTO WITH VARIOUS MILL-COMPANIES, IN RESPECT OF WHICH SECRET COMMISSION HAD TO BE PAID, WERE AVAILABLE. THERE WAS A COMPLETE TALLY BETWEEN T HE COMMISSION PAID AND THE EXTENT OF BUSINESS DONE BY THE MILL-COMPANY. DETAILS WERE ALSO AVAILABLE OF THE EXACT TRANSACTIONS IN RESPECT OF WHICH THE ASSESSEE HAD TO PAY THE SECRET COMMISSION THE ASSESSEE HAD GIVEN A COMPLETE LIST SHOWING THE TURNOVER AND THE AMOUNT OF SECRET COMMISSION PAID FROM YEAR TO YEAR. THE PERCENTAGE OF SECRET COMMISSION WAS MINIMAL. THE FULL DETAILS OF PAYMENT ON THE ABOVE BASIS IN RESPECT OF SEVERAL PARTIES WERE AVAILABLE. THEY WERE CORRELATED T O THE TRANSACTIONS WHICH THE ASSESSEE HAD WITH THOSE PERSONS AND THE PERIOD DURING WHICH THE TRANSACTIONS WERE ENTERED INTO. THE ONLY MISSING ITEM WAS STATED TO BE THE NAMES OF THE PARTICULAR PARTIES TO WHOM THE PAYMENTS WERE MADE. THIS, THE TRIBUNAL HELD, COULD NO T BE SUPPLIED WITHOUT DETRIMENT TO THE BUSINESS OF THE ASSESSEE IN THE VERY NATURE OF THINGS. SHRI PATEL THEN POINTED OUT THAT, IN PARAGRAPH 29 OF THE JUDGMENT, THE SPECIAL BENCH OF THE TRIBUNAL NOTED THAT THE POSITION WAS THE SAME IN THE CASE OF INDOCHEM LTD. AND THAT OF THE ASSESSEE. ON THE ABOVE STATED FACTS, OUR JUDGMENT IN THE CASE OF CIT V. GOODLASS NEROLAC PAINTS LTD. [1991] 188 ITR 1 (INCOME-TAX REFERENCE NO. 606 OF 1976) DATED AUGUST 21, 1990, SQUARELY APPLIES. ACCORDINGLY, WE AGREE WITH THE TRIBUNAL THAT ITS CONCLUSION IS BASED ON A FINDING O F FACT ARRIVED AT ON THE BASIS OF GOOD AND COGENT MATERIAL' 35. IN THE INSTANT CASE OF THE ASSESSEE-COMPANY TOO, THE FACTS ARE IDENTICAL WITH THOSE CONSIDERED BY THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF SIGMA PAINTS (188 ITR 6). THE PAYMENT VOU CHERS GIVING THE RELEVANT DETAILS, INCLUDING THE NAMES OF THE PAYEES, AND ALSO BEARING THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 32 SIGNATURES OF THE PAYEES AS RECIPIENTS OF COMMISSION, HAD B EEN PRODUCED BY THE ASSESSEE-COMPANY BEFORE THE ASSESSING OFFICER IN EACH O F THE 5 YEARS NOW UNDER APPEAL. THE PAYMENT VOUCHERS CONTAINED FULL DETAILS OF THE NATURE OF TRANSACTION VIZ. THE CONSIGNMENT NO., TH E NAMES OF THE CONSIGNOR AND CONSIGNEE, THE NATURE OF GOODS CARRIED, THE FREIGHT AMOUNT, THE AMOUNT OF COMMISSION, THE DATE OF PAYMENT AS WELL A S THE NAME OF THE PAYEE ETC. IN OTHER WORDS, THE DETAILS OF ALL TR ANSACTIONS IN RESPECT OF WHICH THE COMMISSION HAD BEEN PAID BY THE ASSESSEE-COMPANY ARE DULY RECORDED IN THE PAYMENT VOUCHERS AND THE EVIDENCE IN T HE FORM OF CONSIGNMENT NOTES ANNEXED THERETO AND SUCH VOUCHERS CONTAIN ING THE SIGNATURE OF PAYEE ACKNOWLEDGING THE RECEIPT OF COMMISSIO N HAD BEEN DULY PRODUCED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE-CO MPANY HEREIN IN EACH OF THE FIVE YEARS UNDER APPEAL. THE P ERCENTAGE OF COMMISSION PAYMENT WAS MINIMAL AS EVIDENT FROM THE CHAR T APPEARING UNDER PARAGRAPH 6 HEREIN ABOVE. THE ONLY MISSING LI NK WAS THE ADDRESS OF THE PAYEES, WHICH IT WAS ALL ALONG SUBMITTED, WERE NOT MAINTAINED AND COULD NOT BE SUPPLIED, SINCE IT WOULD, IN THE VERY NAT URE OF THINGS, GREATLY JEOPARDISE THE BUSINESS INTEREST OF THE ASSESSEE-COMPANY. 36. SIMILARLY, THE ASSESSEE DREW OUR ATTENTION TO T HE PAPER-BOOK WHICH CONTAINED THE COPIES OF THE VOUCHERS ALONG WITH CONSI GNMENT NOTES. THE VOUCHERS CLEARLY MENTIONED THE CONSIGNMENT NO TE WHICH WAS ATTACHED WITH THE VOUCHER. THE OTHER PAPER BOOK FIL ED BY THE ASSESSEE ALSO CONTAINS SIMILAR VOUCHER ALONG WITH CONSIGNMENT NOTE . IN VIEW OF THE ABOVE FACTS, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE PAYMENT WAS NOT ESTABLISHED BY THE ASSESSEE. IN OUR OPINION, GENUINENESS OF THE PAYMENT S WAS ESTABLISHED BY THE ASSESSEE. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 33 37. NOW COMING TO THE AFFIDAVITS FILED BY REGIONA L MANAGERS BEFORE THE LOWER AUTHORITIES, THE ASSESSING OFFICER REJECT ED AFFIDAVITS OF THE REGIONAL MANAGERS FILED BY THE ASSESSEE ON THE GROUN D THAT THEY WERE SELF SERVING DOCUMENTS. IN OUR OPINION, THOUGH THE AFFI DAVITS ARE ALWAYS SELF SERVING DOCUMENTS, AFFIDAVIT IS A RECOGNISED METHOD O F PROVING THE CASE OF AN ASSESSEE BEFORE THE AUTHORITIES AND AS SUCH, THE LOWER AUTHORITIES CANNOT REJECT THE AFFIDAVITS FILED BY THE A SSESSEE OUTRIGHT, WITHOUT EXAMINING THE DEPONENTS THEREOF IN RELATION TO THE CONTENTS OF SUCH AFFIDAVITS. IN THIS CASE, ADMITTEDLY, THE DEPONENTS OF THE AFFIDAVITS WERE NOT EXAMINED BY THE LOWER AUTHORITIES. THE AFFI DAVITS OF REGIONAL MANAGERS WERE FILED IN ADDITION TO VOUCHERS AND THE COP IES OF CONSIGNMENT NOTES. IN OUR VIEW, THESE PIECES OF EVIDENCE CANNOT BE BRUSHED ASIDE TO DISALLOW THE COMMISSION PAYMENTS. WE HA VE CAREFULLY GONE THROUGH THE JUDGEMENT OF SUPREME COURT IN THE CASE OF MEHTA PARIKH & CO VS. CIT (30 ITR 180)-SC, WHEREIN IT WAS HELD THA T IF THE DEPARTMENTAL AUTHORITIES DO NOT CONSIDER IT NECESSARY TO CALL FOR THE DEPONENTS IN ORDER TO CROSS EXAMINING THEM, WITH REFERE NCE TO THE STATEMENTS MADE BY THEM IN THEIR RESPECTIVE AFFIDAVITS, IT WAS NOT OPEN TO THE REVENUE TO CHALLENGE THE CORRECTNESS OF THE CASH BOOK ENTRIES OR THE STATEMENTS MADE BY THOSE DEPONENTS IN THEIR AFFIDAVITS. 38. FURTHER, S. 3(3) OF THE GENERAL CLAUSES ACT, 1 897 DEFINES AN AFFIDAVIT TO INCLUDE AN AFFIRMATION AND DECLARATION I N THE CASE OF PERSONS BY LAW ALLOWED TO AFFIRM OR DECLARE INSTEAD OF SWEARIN G. THE ESSENTIAL INGREDIENTS OF AN AFFIDAVIT ARE THAT THE STATEMENT O R DECLARATION IS MADE BY THE DEPONENT RELEVANT TO THE SUBJECT MATTER, AND I N ORDER TO ADD SANCTITY TO IT, HE SWEARS OR AFFIRMS THE TRUTH OF THE STA TEMENT MADE IN THE PRESENCE OF A PERSON, WHO IN LAW IS AUTHORISED EITHER TO ADMINISTER OATH OR ACCEPT THE AFFIRMATION. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 34 39. IN UNION OF INDIA & ANR. V. DELHI HIGH COUR T BAR ASSOCIATION & ORS. (2002) 4 SCC 275 (SC) THEIR LORDSHIPS OF THE SUPR EME COURT IN PARAGRAPH 23 OF THEIR JUDGEMENT INTER ALIA HELD AND OBSERVED AS UNDER: ' ..... WHEN THE HIGH COURTS AND THE SUPREME COURT IN EXERCISE OF THEIR JURISDICTION UNDER ARTICLE 226 AN D ARTICLE 32 CAN DECIDE QUESTIONS OF FACT AS WELL AS LAW MERELY ON THE BASIS OF DOCUMENTS AND AFFIDAVITS FILED BEFORE THEM ORDINARILY, THERE SHOULD BE NO REASON WHY A TRIBUNA L LIKEWISE SHOULD NOT BE ABLE TO DECIDE THE CASE MERE LY ON THE BASIS OF DOCUMENTS AND AFFIDAVITS BEFORE IT. ....' IT MAY ALSO BE NOTED THAT IN THE AFORESAID JUDGEMENT, THEIR LORDSHIPS OF THE HONBLE SUPREME COURT, IN PARAGRAPHS 17 & 25 OF T HE SAID JUDGEMENT, DEALT WITH THE POWERS OF THE APPELLATE TRIBUNAL UNDE R THE RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 19 93 AS ALSO SIMILAR POWERS EXERCISED BY TRIBUNAL PERTAINING TO INCOME-TAX, SALES TAX, EXCISE, CUSTOMS OR ADMINISTRATION, THROUGHOUT THE COUNTRY. 40. AGAIN, IN SALEM ADVOCATE BAR ASSOCIATION V. UNI ON OF INDIA (2003) 1 SCC 49 (SC) THEIR LORDSHIPS OF THE SUPREME C OURT IN PARAGRAPHS 17 & 18 OF THE JUDGEMENT ALSO REFERRED TO ORDER 18, RULE 4 OF THE CIVIL PROCEDURE CODE, 1908, WHICH INTER ALIA READ S AS UNDER: ' R.4. RECORDING OF EVIDENCE BY COMMISSIONER (1) IN EVERY CASE, THE EVIDENCE OF A WITNESS OF HIS EXAMINATION-IN-CHIEF SHALL BE GIVEN BY AFFIDAVIT AND COPIES THEREOF SHALL BE SUPPLIED TO THE OPPOSITE PARTY B Y THE PARTY WHO CALLS HIM FOR EVIDENCE.' FURTHER RULE 1 OF ORDER 19 OF THE CIVIL PROCEDURE CO DE, 1908 ALSO PERMITS AFFIDAVITS TO BE FILED: 'R.1. POWER TO ORDER ANY POINT TO BE PROVIDED BY AFFIDAVIT ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 35 .... ANY COURT MAY AT ANY TIME FOR SUFFICIENT REASON ORDER THAT ANY PARTICULAR FACT OR FACTS MAY BE PROVED BY AFFIDAVIT, OR THAT THE AFFIDAVIT OF ANY WITNESS MAY B E READ AT THE HEARING ON SUCH CONDITIONS AS THE COURTS THINKS REASONABLE.' IN OUR CONSIDERED OPINION, THEREFORE, THE TAX AUTHORI TIES WERE NOT JUSTIFIED IN LAW IN ARBITRARILY REJECTING THE AFFIDAVITS SWORN B Y ITS SENIOR OFFICERS OF THE ASSESSEE, MERELY ON THE GROUND THAT THESE WERE SELF SE RVING DECLARATIONS/DOCUMENTS, PARTICULARLY WHEN NEITHER THE A SSESSING OFFICER NOR THE CIT(A) CALLED ANY OF THE DEPONENTS FOR CROSS EXA MINATION, IN COURSE OF THE IMPUGNED ASSESSMENT/APPELLATE PROCEEDINGS, F OR ANY OF THE YEARS NOW UNDER APPEAL. AS CORRECTLY CANVASSED BY THE LD COUNSEL FOR THE ASSESSEE, EVERY AFFIDAVIT IS A SELF SERVING DECLARATION ON OATH MADE BY THE DEPONENT THEREOF, AND ON THAT GROUND ALONE THE AFFI DAVIT CANNOT BE REJECTED AND/OR IGNORED. 41. THOUGH THE LEARNED SENIOR DEPARTMENTAL REPRE SENTATIVE APPEARING FOR THE REVENUE BEFORE THE TRIBUNAL REFER RED TO THE DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN KANHAIYA LAL DOSHI V. ASST. COMMISSIONER (1996) 56 TTJ 207 (TRIB-JAIPUR) IN SUPPORT OF HIS SUBM ISSIONS THAT THE AFFIDAVITS, IN ALL CASES, THE SAME CANNOT BE ACCEPTED AS GOOD EVIDENCE FOR INCOME TAX PROCEEDINGS. IN THAT CASE, THE EVIDENCE OF T HE ASSESSEE, WHO WAS SUBJECTED TO SEARCH AND SEIZURE PROCEEDINGS UNDER SECTIO N 132 OF THE SAID ACT HAD BEEN RECORDED UNDER SECTION 132(4). IN HI S STATEMENT UNDER SECTION 132(4), THE ASSESSEE HAD ACCEPTED HIS OWNERSHIP OF TH E CASH FOUND AND SEIZED FROM HIS POSSESSION AT THE TIME OF SEARCH. HOWEVER, LATER IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FI LED AN AFFIDAVIT CONTRADICTING HIS EARLIER STATEMENT RECORDED U /S 132(4) AT THE TIME OF SEARCH. IN THE BACKGROUND OF THESE FACTS, THE JA IPUR BENCH OF THE TRIBUNAL HELD THAT ALTHOUGH AS A GENERAL RULE IF THE DEPOSITION MADE IN THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 36 AFFIDAVITS IS NOT TESTED THROUGH CROSS EXAMINATION, THE SAME SHOULD BE ACCEPTED, BUT, BEFORE ACCEPTING ANY DEPOSITION CONTAINED IN AN AFFIDAVIT, IT WAS ALWAYS NECESSARY THAT THE DEPOSITION SHOULD INSPIRE CONF IDENCE AND THAT THE SAME SHOULD APPEAL TO THE REASONS OF A PRUDEN T MAN. THE JAIPUR BENCH OF THE TRIBUNAL NOTED THAT IN THAT CASE HUGE AMO UNT OF CASH WAS SEIZED FROM THE POSSESSION OF THE ASSESSEE, AND WHEN AT THE TIME OF SEARCH, HE WAS ASKED ABOUT HIS POSSESSION OF CASH IN SUCH HUGE QUANTITY, THE ASSESSEE CAME OUT WITH THE STATEMENT THAT IT WAS HIS MO NEY EARNED IN BUSINESS BUT NOT DISCLOSED TO THE DEPARTMENT. THIS W AS AN INSTANTANEOUS STATEMENT OF A PERSON, WHO WAS ADMITTEDLY FOUND IN POSSESSION OF CERTAIN PROPERTY IN THE COURSE OF THE SEARCH. SUCH A STATEMENT WAS REQUIRED TO BE GIVEN DUE WEIGHT. AGAIN , THE LATER STATEMENT GIVEN BY THE ASSESSEE THROUGH AFFIDAVIT, FILLE D IN THE COURSE OF ASSESSMENT PROCEEDINGS, WAS FOUND BY THE TRIBUNAL TO BE N OT INSPIRING ANY CONFIDENCE. IN THE LATER STATEMENT IT WAS CLAIMED BY THE ASSESSEE FOR THE FIRST TIME THAT HIS FATHER HAD GIVEN A SUM OF RS. 1 ,000 TO THE FATHER OF THE BRIDE AS A SECURITY MONEY, AND THE FATHER OF THE BRIDE HAD BEQUEATHED THIS MONEY TO HIS DAUGHTER OR SON-IN-LAW AT A SUBSEQUENT PERIOD. THE TRIBUNAL HELD AND OBSERVED THAT IT DID N OT INSPIRE ANY CONFIDENCE THAT THE SUM OF RS. 1,000 WOULD BE GIVEN BY THE ELDER SON-IN- LAW TO THE ASSESSEE SOME 30/35 YEARS BACK, AND THEN THE ASS ESSEE WOULD HAVE STATED RUNNING A DAIRY WITH THAT AMOUNT. ON TH E FACE OF THESE FACTS NOTED BY THE TRIBUNAL IN PARAGRAPH 16 OF ITS SAID ORD ER, IT HELD AND OBSERVED THAT SUCH A THEORY DID NOT INSPIRE CONFIDENCE M ORE PARTICULARLY WHEN THE SAME STOOD CONTRADICTED BY THE ASSESSEE'S OWN STATEM ENT RECORDED EARLIER UNDER SECTION 132(4) AT THE TIME OF SE ARCH. FROM THE AFORESAID FACTS, IT IS CLEARLY EVIDENT THAT THE SAID DECI SION OF THE JAIPUR BENCH OF THE TRIBUNAL RELIED UPON BY THE REVENUE IN THE INSTANT CASE, IS ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 37 CLEARLY DISTINGUISHABLE AND DOES NOT SUPPORT THE STAND O F THE REVENUE THAT THE STATEMENTS MADE IN THE AFFIDAVITS HAVE NO EV IDENTIARY VALUE. 42. SIMILARLY, THOUGH THE LEARNED SENIOR DEPART MENTAL REPRESENTATIVE ALSO RELIED UPON THE DECISION OF THE ALLAHABAD HIGH CO URT IN SRI KRISHNA V. CIT (1983) 142 ITR 618 (ALL) - COPY APPEARING AT PAG ES 616-622 OF THE COMPILATION OF CASE DECISIONS, VOLUME-V, IN SUPPORT OF H IS SUBMISSIONS THAT THE AFFIDAVIT NEED NOT ALWAYS BE ACCEPTED AS CORRECT , THAT DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IS CLEARLY DISTINGUISHA BLE, ON FACTS, AS DISCUSSED BY THEIR LORDSHIPS AT PAGES 623 OF THE REPORTS ( 142 ITR). THEIR LORDSHIPS NOTED THAT ORDINARILY, IN ABSENCE OF DENIAL, THE STATEMENTS MADE IN AN AFFIDAVIT, IN ALL CASES, MAY BE ACCEPTED AS TR UE, UNLESS THERE ARE CIRCUMSTANCES GOING TO SUGGEST THAT THE STATEMENTS ON AF FIDAVIT SHOULD NOT BE ACCEPTED AS TRUE. IN THAT CASE, THE ASSESSEE AF TER 15 YEARS, HAD ASSERTED ON AFFIDAVIT FOR THE FIRST TIME THAT NOTI CES OF DEMAND WERE NOT SERVED ON HIM. THE COURT NOTED THAT THE PLEA OF ALLEGED NON SERVICE OF NOTICES OF DEMAND WAS NEVER TAKEN BY THE ASSESSEE EARLIER; AND THAT HE MADE THIS ASSERTION AFTER A LONG DELAY OF 15 YEARS, WHE N HE BECAME SURE THAT THE INCOME TAX RECORDS PROVING THE SERVICE OF NOTICE S WERE NO LONGER AVAILABLE WITH THE TAX DEPARTMENT. SUCH AN ASSERTION B Y THE ASSESSEE, AFTER A LONG PERIOD OF 15 YEARS, WAS HELD BY THE HON'B LE COURT TO BE NOTHING BUT FALSE AND AN AFTERTHOUGHT. 43. IN THE CIRCUMSTANCES, THE CASES RELIED UPON THE BY T HE REVENUE ARE DISTINGUISHABLE ON FACTS AND IN THE LIGHT OF WELL SETTLE D POSITION OF LAW THAT THE STATEMENTS ON AFFIDAVIT CANNOT BE REJECTED, WITHOUT SUBJECTING THE DEPONENT TO CROSS EXAMINATION, THE TAX AUTHORITIES BELO W WERE NOT JUSTIFIED IN ARBITRARILY IGNORING THE AFFIDAVITS OF S ENIOR OFFICERS OF THE ASSESSEE COMPANY TO THE EFFECT THAT THE COMMISSION IN QUESTIO N WAS ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 38 ACTUALLY AND GENUINELY PAID BY THE ASSESSEE COMPANY, YEA R AFTER YEAR, WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 44. WE MAY NOTE AT THE COST REPETITION THAT THE DE CISION OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS. SIGMA PAINTS LTD. (1991) 188 ITR 6 (BORN), CLEARLY SUPPORTS THE CASE OF THE ASSESSEE COMPANY. I N THAT CASE ALSO THERE WAS PAYMENT OF SECRET COMMISSION. THE ASSESSEE COMPA NY, IN THAT CASE, HAD PRODUCED VARIOUS DETAILS AND RECORDS MAINTA INED BY IT RELATING TO COMMISSION PAYMENTS. THE DETAILS OF SALES TRA NSACTIONS ENTERED INTO WITH VARIOUS MILL COMPANIES, IN RESPECT OF WHICH SECRET COMMISSION HAD BEEN PAID, WERE PRODUCED BEFORE THE ASSESSIN G OFFICER ALONG WITH PAYMENT VOUCHERS. THERE WAS A COMPLETE RECONCI LIATION AND TALLY BETWEEN THE COMMISSION PAID AND THE EXTENT OF BU SINESS DONE BY THE MILL COMPANY. THE PAYMENTS WERE CORRELATED TO THE TRANSACTIONS WHICH THE ASSESSEE HAD WITH THOSE PERSONS. THE ONLY MISSING L INK WAS STATED TO BE THE NAMES OF THE PARTICULAR PARTIES TO WHO M THE PAYMENTS WERE MADE. THIS, THE TRIBUNAL HELD, COULD NOT BE SUPPL IED WITHOUT DETRIMENT TO THE BUSINESS INTERESTS OF THAT ASSESSEE, CONSIDER ING THE VERY NATURE OF THINGS. 45. IN FACT, THIS WAS THE CASE OF THE ASSESSEE COMPANY A LL ALONG FROM ITS VERY INCEPTION. THE FACT THAT THE IDENTITY OF THE PAYEE COULD NOT BE DISCLOSED WITHOUT GREATLY JEOPARDIZING ASSESSEE COMPANY 'S BUSINESS INTERESTS WAS PUT DOWN IN WRITING BEFORE THE ASSESSING O FFICER THROUGH ASSESSEE COMPANY'S THREE LETTERS, ONE DATED 15.03.85, THE OTHER DATED 10.09.85, AND YET ANOTHER DATED 10.03.86, WHICH HAD ALSO BEEN QUOTED BY THE ASSESSING OFFICER IN THE THREE ASSESSMENT ORDERS, ONE DATED 15.03.85 PASSED IN RESPECT OF THE ASSESSMENT YEAR 1982-83, THE OTHER DATED 10.09.85 PASSED IN RESPECT OF THE ASSESSMENT YEAR 19 83-84, AND YET ANOTHER DATED 27.03.86 PASSED IN RESPECT OF THE ASSE SSMENT YEAR ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 39 1984-85. EVEN IN PARAGRAPH 1.24 OF THE ASSESSMENT ORDER PASSED IN RESPECT OF THE ASSESSMENT YEAR 1982-83, THE ASSESSING OFFICER HAD HIMSELF RECORDED THAT IN COURSE OF HEARING BEFORE THE C IT (APPEALS), FOR WHICH YEAR ALSO A SIMILAR DISALLOWANCE FOR COMMISSION PAYME NT WAS MADE, IT WAS CONTENDED THAT COMMISSION PAID WAS IN THE N ATURE OF SECRET COMMISSION AND THAT IT WOULD BE AGAINST THE INTEREST OF THE ASSESSEE TO REVEAL THE IDENTITIES OF THE RECIPIENTS OF THE COMMISSION . COPIES OF THE RELEVANT PORTIONS OF THE ASSESSMENT ORDERS FOR THE SAID T HREE YEARS APPEAR AT PAGES 282-286 OF THE PAPER BOOK, VOLUME - II FILED IN RELATION TO ITA NO. 430/HYD/07 IN RESPECT OF THE ASSESSMENT YEAR 20 00-01. 46. IT HOWEVER APPEARS THAT THE ATTENTION OF THEI R LORDSHIPS OF THE HON'BLE HIGH COURT OF ANDHRA PRADESH WAS INADVERTENTLY NOT DRAWN TO THE AFORESAID CONTENTIONS OF THE ASSESSEE COMPANY, AS RECORDED B Y THE ASSESSING OFFICER HIMSELF IN THE RESPECTIVE IMPUGNED ASSESSMENT ORDERS; AND THE HIGH COURT DISTINGUISHED THE CASE OF THE ASSESSEE CO MPANY WITH THAT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS. SIGMA PAINTS LTD. (1991) 188 ITR 6 (BOM) ONLY ON THE GROUN D, AS RECORDED AT PAGE 713 OF THE REPORTS(256 ITR), THAT IT WAS NOT THE CASE OF THE ASSESSEE BEFORE THE ASSESSING AUTHORITY THAT THE PARTICULARS OF THE PERSONS TO WHOM SECRET COMMISSION WAS PAID COULD NOT BE SUPPL IED WITHOUT DETRIMENT TO THE BUSINESS OF THE ASSESSEE HAVING R EGARD TO THE NATURE OF THE BUSINESS OF TRANSPORT OF CARGO CARRIED ON BY THE ASSESSEE COMPANY. 47. EVEN IN THE YEARS UNDER APPEAL, IT WAS ALL ALONG STAT ED BEFORE THE TAX AUTHORITIES ON BEHALF OF THE ASSESSEE COMPANY T HAT HAVING REGARD TO THE SMALL AMOUNT OF COMMISSION BEING PAID BY IT, TH E DETAILS OF ADDRESSES OF THE PAYEES VIZ. AGENTS AND EMPLOYEES OF THE CUSTOMERS HAD NOT BEEN MAINTAINED BY IT, AND THAT SUCH ADDRESSES COULD NOT BE SUPPLIED, ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 40 EVEN OTHERWISE, WITHOUT CAUSING SERIOUS DETRIMENT TO THE BUSINESS INTERESTS OF THE ASSESSEE COMPANY, HAVING REGARD TO THE FACT THAT IN THAT EVENT, NO AGENT/EMPLOYEE OF ITS CUSTOMERS WOULD COME FO RWARD TO BOOK THE CARGO OF THEIR PRINCIPAL/EMPLOYER WITH THE ASSESSEE C OMPANY THEREIN. WE HAVE ALSO TAKEN NOTE OF THE LETTER DATED 05.03.20 06 ADDRESSED BY THE ASSESSEE COMPANY TO THE ASSESSING OFFICER, IN COURSE OF THE ASSE SSMENT PROCEEDINGS FOR THE YEAR UNDER APPEAL, A COPY WHEREOF APPEARS AT PAGES 287-289 OF THE PAPER BOOK, VOLUME II FILED IN RELAT ION TO ITA NO. 430/- HYD/07 IN RESPECT OF THE ASSESSMENT YEAR 2000-01. 48. THE INITIAL ONUS AND BURDEN OF PROOF, AS RIGHT LY OBSERVED BY THE HON'BLE ANDHRA PRADESH HIGH COURT IN ASSESSEES OWN CASE (SUPRA), IS ALWAYS ON THE ASSESSEE. IN THE INSTANT CASE, SUCH INITIAL ONUS AND BURDEN OF PROOF HAS BEEN DULY DISCHARGED BY THE ASSESSEE COMPANY BY PRODUCING ITS AUDITED BOOKS OF ACCOUNTS, PAYMENT VOUCHERS -AND OTHER DOCUMENTS GIVING FULL DETAILS AS TO THE NATURE OF TRANS ACTIONS, WHICH NECESSITATED THE PAYMENT OF SUCH COMMISSION, INCLUDING THE AFFIDAVITS SWORN BY THE REGIONAL/ZONAL/DIVISIONAL/AREA/CONTROLLI NG MANAGERS, OPERATIONAL HEADS VIZ. VICE-PRESIDENTS AND SENIOR EXECUT IVES ETC. DECLARING, INTER ALIA, ON OATH THAT THE COMMISSION PAY MENTS WERE ACTUALLY AND FACTUALLY MADE BY THE ASSESSEE COMPANY BY WAY OF INCEN TIVES TO THE EMPLOYEES/AGENTS/ REPRESENTATIVES OF CUSTOMERS, WHO BRO UGHT IN CARGO TO THE ASSESSEE COMPANY FOR BOOKING; AND THAT THIS WAS AN ACCE PTED NORM AND ESTABLISHED TRADE PRACTICE IN THE TRANSPORT BUSINESS; AND THAT WITHOUT SUCH PAYMENT, IT WAS NOT POSSIBLE TO SURVIVE IN THIS LINE OF BUSINESS, AS WELL AS THE PREVALENT TRADE PRACTICE IN THE LINE OF BU SINESS CARRIED ON BY THE ASSESSEE COMPANY ALL ALONG. 49. WE ALSO BE NOTICED THAT IN THE FOUR YEARS, CONSI DERED BY THE HON'BLE JURISDICTIONAL HIGH COURT, THE TOTAL COMMISSION W AS NEVER ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 41 DISALLOWED. THE AMOUNT OF COMMISSION DISALLOWED IN THOSE FOUR YEARS RANGED FROM 9.45% TO 11.98% OF THE AGGREGATE FREIGH T RECEIVED BY THE ASSESSEE COMPANY IN EACH OF THE RELEVANT YEARS. 50. IN VIEW OF THE FACTS AND CIRCUMSTANCES DISCUSSED HEREI NABOVE THE DECISION OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN ASSESSEE COMPANY'S OWN CASE IN RESPECT OF THE ASSESSMENT YEARS 1981-82 TO 1984-85 (SUPRA), IS CLEARLY DISTINGUISHABLE ON FACTS, AND CANNOT SUPPORT THE STAND OF THE REVENUE THAT THE ENTIRE PAYMENT OF COMMISSION CLAIMED BY THE ASSESSEE COMPANY AS A DEDUCTIBLE BUSINESS EXPENDITUR E SHOULD BE DISALLOWED IN EACH OF THE 5 YEARS NOW UNDER APPEAL. 51. WE ARE ALSO SUPPORTED IN THIS BEHALF BY THE F OLLOWING DECISIONS, RELIED UPON BY THE LEARNED COUNSEL FOR THE A SSESSEE, WHEREIN IDENTICAL FACTS AND CIRCUMSTANCES AS IN THE CASE OF THE ASSESSEE HEREIN, FOR EACH OF THE FIVE YEARS UNDER APPEAL, HAVE BEEN CON SIDERED:- A. CIT VS. GOODLASS NEROLAC PAINTS LTD. (1991) 188 ITR 1 (B OM); B. CIT V. SIGMA PAINTS LTD. (1991) 188 ITR 6 (BOM); C. DR. G.G. JOSHI VS. CIT (1994) 209 ITR 324 (GUJ); D. CIT VS. ASK RATHINASAMY NADAR (1995) 212 ITR 527 (MAD ); E. CIT VS. MILLS STORES TRADING CO. INDIA PVT. LTD. (1984 ) 18 TAXMAN 85 (BOM); F. CIT VS. HOECHST DYES & CHEMICALS LTD. (1984) 17 TAXMAN 389 (BORN); G. APL INDIA PVT. LTD. VS. DCIT (2005) 96 ITD 227 (MUM) ; H. SAGA DEPARTMENTAL STORES LTD. V. CIT (2010) 325 ITR 324 (DEL) I. CIT V. PRINTERS HOUSE PVT. LTD. (2010) 188 TAXMAN 70 ( DEL). 52. IN GOODLASS NEROLAC PAINTS' CASE (SUPRA), THEIR LO RDSHIPS OF THE HON'BLE BOMBAY HIGH COURT ALSO FOUND THAT IN THE E ARLIER YEAR OF THE VERY SAME ASSESSEE, THE PAYMENT OF COMMISSION WAS DISALLOWED ; AND THAT SUCH DISALLOWANCE WAS ALSO CONFIRMED BY THE HON'BLE HIG H COURT. HOWEVER, IN THE LATER YEAR, THE TRIBUNAL HAD ALLOWED THE PAYMENT OF ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 42 COMMISSION IN THE CASE OF THE VERY SAME ASSESSEE. THE FOLLOWI NG OBSERVATIONS MADE BY THE HON'BLE BOMBAY HIGH COURT AT PAGES 4, 5 & 6 OF THE REPORTS ARE EXTREMELY RELEVANT AND THESE ALSO SU PPORT THE CASE OF THE ASSESSEE COMPANY HEREIN; 'IT CANNOT, PERHAPS, BE DISPUTED THAT, IN ORDER TO B E ENTITLED TO DEDUCTION OF PAYMENTS TO PERSONS WHOSE NAMES ARE NOT DISCLOSED, THE ASSESSEE HAS TO ESTABLISH THE PRACTICE PREVAILING IN THAT LINE OF BUSINESS FOR MAKING SUCH PAYMENTS, IT HAS TO ADDUCE SATISFACTORY EVIDENCE TO ESTABLISH THE PAYMENTS, AND HAS ALSO TO SATISFY THE AUTHORITIES THAT THE PAYMENTS WERE MADE FOR THE PURPOSE OF BUSINESS. NO DOUBT, FOR THE EARLIER YEAR , THE MATTER CAME UP BEFORE THIS COURT. THE TRIBUNAL HAD COME TO THE CONCLUSION THAT THE ASSESSEE HAD NOT PROVED THE PAYMENTS BY WAY OF SECRET COMMISSION AND AS SUCH WAS NOT ENTITLED TO DEDUCTION. THIS BEING A FINDING OF FACT, OUR COURT DECLINED TO INTERFERE AS THE VIEW TAKEN BY THE TRIBUNAL WAS A POSSIBLE VIEW. IN THE PRESENT CASE, THE TRIBUNAL, IT APPEARS, HAD TO CONSIDER SOME NEW FACTS AND ASPECTS OF THE MATTER. IT FOUND THAT THE ASSESSEE WAS CARRYING ON BUSINESS IN THE LINE IN WHICH PAYMENTS WERE MADE TO THE EMPLOYEES OF THE CUSTOMERS TO KEEP THEM ON THE RIGHT SIDE AND TO ENSURE THE FLOW OF ORDERS, QUICK PAYMENT AND SMOOTH RUNNING OF BUSINESS IN ALL RESPECTS, INCLUDING QUICK PAYMENT OF BILLS. THE TRIBUNAL ALSO FOUND THAT THE ASSESSEE WAS MAINTAINING PROPER ACCOUNTS AND RECORDS REGARDING THESE PAYMENTS IN THAT THE PAYMENTS WERE MADE UNDER THE INSTRUCTIONS AND DIRECTIONS OF THE TOP EXECUTIVES OF THE COMPANY AND WERE APPROVED BY THE BOARD OF DIRECTORS AT THE END OF EVERY MONTH. ACCORDING TO THE TRIBUNAL, THE FACTS THAT THE ASSESSEE WAS A PUBLIC LIMITED COMPANY, THAT THE ACCOUNTS WERE NOT MERELY AUDITED BUT WERE ALSO PLACED BEFORE THE GENERAL BODY OF THE SHAREHOLDERS, THAT THE ASSESSEE'S TURNOVER WAS INCREASING YEAR AFTER YEAR AND THAT SUCH PAYMENTS CLAIMED AS DEDUCTION HAD DROPPED FROM 1.34% FOR ONE OF THE YEARS TO 0.22% IN THE YEAR IN QUESTION, WERE V ERY RELEVANT. ON THE BASIS OF THESE AND OTHER EVIDENCE, THE TRIBUNAL CONCLUDED THAT THE FACT OF PAYMENT OF ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 43 COMMISSION WAS ESTABLISHED EVEN THOUGH THE NAMES AND ADDRESSES OF THE RECIPIENT WERE NOT GIVEN AND THAT THE PAYMENTS WERE MADE FOR THE PURPOSE OF BUSINESS. AS OBSERVED BY OUR HIGH COURT IN THE ASSESSEE'S OWN CASE FOR THE EARLIER YEAR, IT WAS PERFECTLY OPEN TO THE TRIBUNAL TO ACCEPT OR NOT TO ACCEPT THE ASSESSEE'S CLAIM FOR PAYMENT. IT WAS FOR THE TRIBUNAL TO DECIDE AS A F INAL JUDGE OF FACTS AS TO WHETHER THE CASE OF THE ASSESSEE THAT THE AMOUNTS CLAIMED TO HAVE BEEN PAID WERE ACTUALLY PAID SHOULD OR SHOULD NOT BE ACCEPTED IN THE ABSENCE OF THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE AMOUNTS WERE PAID. HAVING THEN REGARD TO THE MATERIAL REFERRED TO AND RELIED UPON BY THE TRI BUNAL FOR COMING TO THE CONCLUSION IN FAVOUR OF THE ALLOWABI LITY OF THE CLAIM FOR DEDUCTION, WE DECLINE TO INTERFERE, A S THE CONCLUSION OF THE TRIBUNAL IS A FINDING OF FACT AND IS BASED ON COGENT MATERIAL. ' 53. IN THE CASE OF THE ASSESSEE COMPANY TOO, THE FACTS, AS WERE FOUND IN GOODLASS NEROLAC PAINTS CASE (SUPRA), ARE IDENTICAL, AS ALREADY SET OUT HEREIN ABOVE. HERE TOO, THE RATE OF COMMISSION PAYMEN T IS GOING DOWN AND HAS DROPPED FROM 4.09% IN AY 1981-82 TO 1.16% I N AY 2001-02, AND AGAIN TO 0.48% IN AY 2005-06. THEREFORE, THE DE CISION OF THE HON'BLE BOMBAY HIGH COURT IN GOODLASS NEROLAC PAINTS' CASE (SUPRA) FULLY SUPPORTS THE INSTANT CASE OF THE ASSESSEE COMPANY HEREIN. 54. IN DR. G.G. JOSHI V. CIT (1994) 209 ITR 324 (GUJ), THEIR LORDSHIPS OF THE HON'BLE GUJARAT HIGH COURT ALSO FOLLOW ED THE BOMBAY DECISIONS REFERRED TO HEREINABOVE, AND INTER ALIA HELD AND OBSERVED AT PAGED 328 OF THE REPORTS AS UNDER: 'FURTHER, A SIMILAR VIEW IS TAKEN BY THE BOMBAY HIGH C OURT IN THE CASE OF CIT V. GOODLASS NEROLAC PAINTS LTD. [1991] 18 8 ITR 1. THE BOMBAY HIGH COURT, RELYING UPON ITS EARLIE R DECISION RENDERED IN THE CASE OF GOODLASS NEROLEC PAINTS LT D. V. CIT [1982] 137 ITR 58, HELD THAT IT CANNOT, PERHA PS, BE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 44 DISPUTED THAT, IN ORDER TO BE ENTITLED TO DEDUCTION OF PAYMENTS TO PERSONS WHOSE NAMES ARE NOT DISCLOSED, THE ASSESSEE HAS TO (I) ESTABLISH THE PRACTICE PREVAILING IN THAT LINE OF B USINESS FOR MAKING SUCH PAYMENTS; (II) ADDUCE SATISFACTORY EVIDENCE TO ESTABLISH THE PAYME NTS; (III) SATISFY THE AUTHORITIES THAT THE PAYMENTS WERE MA DE FOR THE PURPOSE OF BUSINESS. IT IS FURTHER HELD THAT THIS WOULD BE A FINDING OF FA CT AND THE COURT WOULD NORMALLY DECLINE TO INTERFERE WITH THE VI EW TAKEN BY THE TRIBUNAL. IT IS ALSO HELD THEREIN THAT THE HIGH COURT WOULD NOT INTERFERE WITH THE FINDING OF FACT UNLESS SU CH FINDING IS PERVERSE OR IS SUCH THAT NO REASONABLE PERSON CAN GIVE SUCH FINDING. AS STATED ABOVE, IN THE PRESENT CASE, THE TRIBUNAL HAS RE LIED UPON ITS PREVIOUS DECISIONS WITH REGARD TO THE SAME COMPAN Y FOR HOLDING THAT IT WAS A PRACTICE PREVAILING IN THE T RADE OF DYE-STUFFS AND COLOUR CHEMICALS WHICH ARE BEING SOLD TO THE TEXTILE MILLS TO PAY SECRET COMMISSION. THIS ASPECT IS ALSO CONSIDERED BY THIS COURT IN THE CASE OF MOOLCHAND JAIKISHANDAS AND CO. [1977] 108 ITR 500. CONSIDERING T HE AFORESAID FACTS AND THE ESTABLISHED TRADE PRACTICE, IT CA NNOT BE SAID THAT THE FINDING GIVEN BY THE TRIBUNAL OF UP HOLDING PARTIAL DISALLOWANCE CAN BE INTERFERED WITH BY THIS COUR T. IN THIS VIEW OF THE MATTER, AS ALL THESE QUESTIONS REFERRE D TO THIS COURT ARE BASED UPON A FINDING OF FACT, THEY ARE REQUI RED TO BE ANSWERED ACCORDINGLY. ' 55. IN CIT V. A.S.K. RATHINASAMY NADAR (1995) 212 ITR 527 (MAD), THEIR LORDSHIPS OF THE HON'BLE MADRAS HIGH COURT HELD AND OBSERVED AT PAGES 529, 531 & 532 OF THE REPORTS INTER ALIA AS UNDER: 'IT IS SEEN FROM THE ORDERS OF THE INCOME-TAX OFFICER, THE APPELLATE ASSISTANT COMMISSIONER AND THE TRIBUNAL AND THE STATEMENT OF THE CASE SUBMITTED TO THIS COURT THAT THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 45 INCOME-TAX OFFICER EXAMINED THE VOUCHERS GIVEN IN SUPPOR T OF THE PAYMENT OF BROKERAGE IN CONNECTION WITH THE TRANSA CTION WITH ASHOK LEYLAND LIMITED AND TO OTHERS. HE, HOWEVER, DISALLOWED THE COMMISSION ON THE GROUND THAT THERE WERE NO ADDRESSES AVAILABLE IN THE VOUCHERS. THE ASSESSEE, HOWEVER, SUBMITTED A LETTER STATING THAT ALL THE PAYMENTS MADE BY THEM WERE GENUINE, THAT THE PAYMENTS WERE MADE TO SEV ERAL PERSONS LIKE CARPENTERS AND THAT THEY WERE NOT IN A POSI TION TO PRODUCE ANY OF THE RECIPIENTS FOR THE EXAMINATION IN RESPECT OF ASHOK LEYLAND LIMITED, THOUGH THEY WOULD PRODUCE T HEM IN ALL OTHER CASES. THE INCOME-TAX OFFICER, HOWEVER, OBSERV ED THAT ASHOK LEYLAND LIMITED WAS AN ESTABLISHED CONCERN AND THAT IF THE PAYMENTS HAD BEEN MADE TO EFFECT PURCHASES T HEN THE PERSON CONCERNED MUST BE A PERSON OF STATUS AND THERE SHOULD BE NO DIFFICULTY FOR THE ASSESSEE TO PRODUCE THE RECIPIENT FOR CROSS-EXAMINATION. THE APPELLATE ASSISTANT COMMISSIONER, HOWEVER, MAINLY TOOK NOTICE OF THE TRADE PRACTICE AND RECORDED HIS DISAGREEMENT WITH THE VIEW OF THE INCOME-TAX OFFICER AS REGARDS THE BROKERAGE PAID TO ASHO K LEYLAND LIMITED AND OTHERS WERE CONCERNED. THE TRIBUNAL, HOWEVER, HAS AGREED WITH THE APPELLATE ASSISTANT COMMISSIONER THAT THERE IS A GENERAL TRADE PRA CTICE OF PAYING COMMISSION AND BROKERAGE ON THE TIMBER SALE S MADE WHICH IS GENERALLY DICTATED BY BUSINESS NEEDS AND EXIGENCIES, A FACT WHICH HAS NOT BEEN DENIED BY THE IN COME- TAX OFFICER ALSO, AND HE HIMSELF HAS ALLOWED A SMALL AMO UNT OF COMMISSION ON THE SAID BASIS. IT HAS, HOWEVER, FURTHER SAID THAT SO LONG AS THE PREVAILING PRACTICE OF PAYMENT OF COMMISSION AND BROKERAGE IS RECOGNISED IN THIS LINE OF BUSINESS AND THE COMMISSION PAYMENT CLAIMED IS REASONABLE AND COMPARABLE TO COMMISSION PAID BY OTHERS IN THIS LINE OF BUSINESS, IT IS ONLY REASONABLE TO PRESUME THAT THE ASSESSEE MUST ALSO HAVE PAID SUCH COMMISSION IN RESPECT OF SALES EFFECTED BY IT. VIEWED IN THIS LIGHT, IT HAS SAID THAT THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER ALLOWING BROKERAGE PAYMENT FOR SALES EFFECTED TO ASHOK LEYLAND LIMITED A ND OTHER ALLIED PURCHASERS HAS TO BE UPHELD. XXXX XXXX XXXX PAGES 531-532 ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 46 ' ..... THE TRIBUNAL IN THE INSTANT CASE HAS TAKEN NOT ICE OF THE EVIDENCE AS WELL AS THE TRADE PRACTICE AND HAS ACCEPTED T HE CASE OF THE ASSESSEE AS GENUINE. ONCE A COURT OR A TRIBUNAL, ON THE FACTS, HAS FOUND CERTAIN EVIDENCE GENUINE AND SUFFICIENT, IT IS NOT OPEN TO ANY APPELLATE OR SUPERV ISORY AUTHORITY TO REVERSE THE SAME MERELY ON THE GROUND TH AT IT HAS ANY OTHER VIEW ON THE SUFFICIENCY OF THE EVIDENCE A ND GENUINENESS OF THE CASE OF THE ASSESSEE. ONE OF THE SETTLED PRINCIPLES OF LAW IS THAT THE HIGH COURT WHILE ANSWERING ANY QUESTION SHALL NOT RECORD ITS OWN FINDINGS ON ISSUES OF FA CTS. IT CAN, UNDOUBTEDLY, SEE WHETHER THERE IS ANY INVALID MAT ERIAL TAKEN INTO CONSIDERATION BY THE TRIBUNAL OR WHETHER A NY VALID MATERIAL HAS BEEN OMITTED AND NOT TAKEN INTO CONSIDERA TION. THE HIGH COURT CANNOT, HOWEVER, GO INTO THE FACTS FIRS T TO DECIDE ANY ISSUE OF FACT WHICH IS OPPOSITE TO THE OPINION AND COME TO A FINDING OPPOSITE TO THAT OF THE TRIBUNAL AN D THEN HOLD THAT THE TRIBUNAL HAS COMMITTED AN ERROR OF LAW. LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO A BEN CH DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF GOODLASS NEROLAC PAINTS LTD. V. CIT [1982) 137 ITR 58, WHICH H AS TAKEN NOTICE OF THE TRADE PRACTICE OF SECRET COMMISSION PAID TO THE CUSTOMERS AND OTHERS AND FOUND NO ERROR IN GRANTING DEDUCTION OF SUCH EXPENDITURE UNDER SECTION 37 OF THE ACT . TO CONCLUDE, WE HOLD THAT THE TRIBUNAL HAD FULL MATERIAL S TO SUPPORT ITS CONCLUSION AND IT HAS COMMITTED NO ERROR OF L AW. THE REFERENCE IS ANSWERED ACCORDINGLY .....' 56. IN CIT V. MILLS STORES TRADING CO. INDIA PVT . LTD. (1984) 18 TAXMAN 85 (BORN), THEIR LORDSHIPS OF THE HON'BLE BOMB AY HIGH COURT HELD AND OBSERVED AT PAGE 86 OF THE REPORTS INTER ALIA AS U NDER: '2. THE FACTS GIVING RISE TO THIS APPLICATION ARE THAT T HE ASSESSEE CARRIES ON THE BUSINESS OF THE SUPPLYING MILL STORE S TO VARIOUS MILLS. THE ASSESSEE CLAIMED AN AMOUNT OF RS. 26,112 BY WAY OF SECRET COMMISSION PAID TO THE EMPLOYEE S OF VARIOUS MILLS WHO HAD PURCHASED GOODS FROM THE ASSESSEE. THE ITO DISALLOWED THE SUM OF RS. 26,112 ON THE GROUND THAT THE FACT OF PAYMENT AND ITS NEXUS WITH THE BUSINESS OF T HE ASSESSEE HAS NOT BEEN ESTABLISHED. AN APPEAL PREFERRED BY THE ASSESSEE WAS, HOWEVER, ALLOWED BY THE COMMISSIONER (APPEALS). THE TRIBUNAL UPHELD THIS DECISION. THE PRE SENT APPLICATION IS DIRECTION AGAINST THE ORDER OF THE TRIB UNAL. THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 47 CRUCIAL QUESTION IS WHETHER THERE WAS ANY EVIDENCE BEFORE THE TRIBUNAL TO PROVE THE FACT OF PAYMENT OF THIS AMOUNT AS THE SECRET COMMISSION AND WHETHER IT COULD BE SAID TO HAVE BEE N AN AMOUNT LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PU RPOSES OF THE ASSESSEE'S BUSINESS. THESE ARE LARGELY QUESTIONS OF FACT. THE ASSESSEE SHOWED TO THE TRIBUNAL THAT THE PAYMENT OF THIS AMOUNT AS THE COMMISSION HAD BEEN APPROVED BY THE BOARD OF DIRECTORS OF THE ASSESSEE, WHICH IS A PRIVATE LIMITED COMPANY_ IT WAS FURTHER POINTED OUT BY THE LEARNED COU NSEL FOR THE ASSESSEE THAT SUCH PAYMENTS HAD BEEN MADE EVEN I N EARLIER YEARS AND HAD BEEN ALLOWED AS DEDUCTIONS WITHOU T ANY OBJECTION BEING RAISED BY THE DEPARTMENT. THE COMMISSIO N WAS PAID AT A UNIFORM RATE OF 2 1/2 PER CENT. WE FURT HER FIND THAT THE ASSESSEE HAD FILED BEFORE THE TRIBUNAL A DETAI LED LIST CONTAINING NAMES OF THE MILLS TO WHOSE AGENTS AND EMPLOY EES SUCH COMMISSION HAD BEEN PAID AND SHOWING ALSO THE VALUE OF THE GOODS SOLD TO THESE MILLS. THE ASSESSEE HAD ALSO SUPPLI ED TO THE TRIBUNAL THE PARTICULARS OF THE BILLS AND THE A MOUNTS OF THE COMMISSION PAID, ALTHOUGH THE NAMES OF THE PERSON TO WHOM IT WAS PAID WERE NOT DISCLOSED. IT IS EASY TO UNDERST AND WHY SUCH NAMES WERE NOT DISCLOSED, BECAUSE HAD THEY BEEN DISCLOSED, SUCH EMPLOYEES WOULD HAVE BEEN DEALT WITH BY THEIR EMPLOYERS - THE MILLS CONCERNED. ON THIS MATERIAL, THE TRIBUNAL HELD THAT ALTHOUGH THE EVIDENCE WAS NOT DIR ECT, THERE WAS EVIDENCE TO SHOW THAT THERE WAS NEXUS BETWEEN THESE PAYMENTS AND THE BUSINESS OF THE ASSESSEE. 3. IN THE STATE OF FACTS SET OUT ABOVE, IT IS NOT POSSIBL E TO SAY THAT THE FINDINGS OF THE TRIBUNAL, WHICH WE HAVE RE FERRED TO ABOVE, HAVE BEEN ARRIVED AT WITHOUT ANY EVIDENCE. AS POINTED OUT BY A DIVISION BENCH OF THIS COURT IN GOODLASS NEROL AC PAINTS LTD. V. CIT [1982] 137 ITR 58 THE COURT OBSERV ED: ' ..... IT WAS FOR THE TRIBUNAL TO DECIDE, AS THE FINA L JUDGE OF FACTS, AS TO WHETHER THE CASE OF THE ASSESSEE THAT THESE AMOUNTS WERE ACTUALLY PAID BY WAY OF SECRET COMMISSION, SHOULD BE BELIEVED OR NOT, IN THE ABSENCE OF THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM SECRET COMMISSIONS WERE ALLEGED TO HAVE BEEN PAID ' (P. 62) 4. IN THAT CASE, ON THE FACTS THE TRIBUNAL HAD DISBELIE VED THE CASE OF THE ASSESSEE REGARDING PAYMENTS OF SUCH AMOUNTS AS ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 48 SECRET COMMISSION AND WE DECLINED TO INTERFERE WITH THAT FINDING FOR THE REASONS STATED ABOVE. IN THE PRESENT CASE , THE TRIBUNAL HAS BELIEVED THAT CASE OF THE ASSESSEE THAT THE PAYMENTS WERE MADE AS WELL AS THAT THERE WAS NEXUS BETWEEN THE SAID PAYMENT AND THE BUSINESS OF THE ASSESSEE AND WE DO NOT SEE HOW THESE FINDINGS OF FACT CAN BE INTERFERED WITH IN A REFERENCE. ' 57. THE SAME VIEW WAS REITERATED BY THE HON'BLE BOM BAY HIGH COURT IN CIT V. HOECHST DYES & CHEMICALS LTD. (1984) 17 T AXMAN 389 (BOM). 58. IN SAGA DEPARTMENTAL STORES LTD. V. CIT(A) (2 010) 325 ITR 324 (DEL), THEIR LORDSHIPS OF THE HON'BLE DELHI HIGH CO URT WERE CONSIDERING THE CLAIM FOR DEDUCTIBILITY OF EXPENDITURE INCURRED BY THE ASSESSEE FOR PAYMENT OF COMMISSION TO TAXI DRIVERS, GUIDES AND OTHER COMMISSION AGENTS TO THE TUNE OF RS. 11,45,47,937 WHICH W AS AROUND 18- 20% OF THE TOTAL TURNOVER OF THE ASSESSEE. IT WAS NOTICED THAT THE ASSESSEE HAD DECLARED A GROSS PROFIT RATE OF 54.15% OF TUR NOVER AS AGAINST THE NET PROFIT RATE OF 1.93% ONLY. THE TAX AUTHORITIES HELD THAT THE EXPENSES BY WAY OF PAYMENT OF COMMISSION TO TAXI DRIVERS, GUIDES AND OTHER COMMISSION AGENTS WAS UNREASONABLE INFLATED. THE CIT(A) NOTED THAT THE ASSESSEE WAS UNABLE TO PROVE THAT THE COMMISSION HAD BEEN PAID FOR RENDERING THE ACTUAL SERVICES, MORE PARTICULARLY WHE N THE ASSESSEE HAD NOT FURNISHED CREDIBLE EVIDENCE IN THE FORM OF NA MES, ADDRESSES ETC. OF THE PERSONS TO WHOM SUCH COMMISSION WAS PAID. HAVING REGA RD TO THESE FACTS, THE CIT(A) HAD ALLOWED DEDUCTION OF EXPEND ITURE BY WAY OF COMMISSION TO THE EXTENT OF 14% OF TURNOVER. THE TRIBU NAL, ON FURTHER APPEAL NOTICED THAT MOST OF THE VOUCHERS EVIDENCING PAYM ENT OF COMMISSION WERE SALES MADE AND THAT THE ASSESSEE DID NOT PRO DUCE ANY OF THE RECIPIENTS OF THE COMMISSION. IN THAT VIEW OF TH E MATTER THE TRIBUNAL ALLOWED COMMISSION @ 16% OF THE TURNOVER AS AGAINST 14% ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 49 ALLOWED BY THE CIT(A). THE HON'BLE HIGH COURT, ON FUR THER APPEAL UNDER SECTION 260A OF THE SAID ACT CONFIRMED THE ORDER OF THE LEARNED TRIBUNAL WHEREBY EXPENDITURE BY WAY OF COMMISSION WAS ALLOWED @ 16% OF THE TURNOVER. 59. IN THE INSTANT CASE OF THE ASSESSEE COMPANY HEREIN, THE PAYMENT OF TOTAL COMMISSION IN EACH OF THE 5 YEARS UNDE R APPEAL IS ONLY RANGING BETWEEN 1.16% TO 0.48% OF ITS TOTAL TURNOVER . 60. IN CIT V. PRINTERS HOUSE PVT. LTD. (2010) 188 TAXMAN 70 (DEL), THEIR LORDSHIPS OF THE HON'BLE DELHI HIGH COURT CONFIRMED THE ORDER OF THE LEARNED TRIBUNAL WHICH HAD ALLOWED PAYMENT OF COMMISSION @ 1.5% IN RELATION TO LOCAL SALES AND 7% OF THE EXPORTS SA LES, AS A BUSINESS EXPENDITURE WITH THE FOLLOWING OBSERVATIONS : '... THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE COMMISSION WAS PAID TO ANY NEAR RELATIVE, FAMILY MEMBE R OR SISTER CONCERN. THERE IS NO IOTA OF EVIDENCE TO SHOW THAT THE PAYMENT OF COMMISSION REPRESENTED ONLY ACCOMMODATION ENTRY OR WAS ONLY A PAPER TRANSACTION. THERE IS ALSO NO EVIDENCE TO SHOW THAT THE AMOUNT OF COMMISSION CAME BACK TO THE ASSESSEE IN ANY FORM. SINCE THE ASSESSEE HAS GIVEN FUL L DETAILS INCLUDING THE ADDRESSES OF BUYERS AND ADDRESSES OF THE AGENTS, AS WELL AS DETAILS OF PAYMENT ETC. THE TRANSACT IONS OF PAYMENT OF COMMISSION AS WELL AS THE ASPECT OF RENDERING SERVICES BY THE COMMISSION AGENTS WERE FULLY VERIFIABLE. HOWEVER, NEITHER THE ASSESSING OFFICER NOR THE LEARNED CI T (APPEALS) MADE ANY ATTEMPT AT THEIR END TO MAKE PRO BE INTO THE MATTER FOR COMING TO THE CONCLUSION THAT THE TRANSAC TIONS WERE BOGUS, UNFAIR AND FRAUDULENT. IN OUR OPINION, IN ABSENCE OF ANY SUCH MATERIAL ON RECORD AND IN ABSENCE OF ANY INQ UIRY CONDUCTED TO PROVE THE NON-GENUINENESS OF THE TRANSACTION S THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN DI SALLOWING THE CLAIM OF THE ASSESSEE WHICH WAS FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCE ON RECORD.' ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 50 61. FURTHER, IN PARAGRAPH 7 OF HIS IMPUGNED ASSESSM ENT ORDER DATED 31ST MARCH, 2004 PASSED BY THE ASSESSING OFFICER, IN T HE INSTANT CASE OF THE ASSESSEE COMPANY, FOR THE ASSESSMENT YEAR 2001-02 UNDER SECTION 143(3) OF THE SAID ACT, THE ASSESSING OFFICER HAD O BSERVED HAT FROM THE VOUCHERS OF COMMISSION PAYMENTS PRODUCED BY THE ASSESSEE COMPANY AND EXAMINED BY HIM, IT WAS FOUND THAT IN CERT AIN CASES COMMISSION WAS PAID IN THE RANGE OF 11 % TO 32.84% OF T HE FREIGHT AMOUNTS NOTED IN THE ACCOMPANYING CONSIGNMENT NOTES AND T HAT INSTANCES OF SINGLE PAYMENT OF COMMISSION IN RESPECT OF SEVE RAL CONSIGNMENTS BOOKED FROM DIFFERENT CLIENTS WERE NOTICED; AND THAT APPARENTLY PAYEES COULD NOT BE EMPLOYEES OF SO MANY DI FFERENT CUSTOMERS. THESE ALLEGATIONS MADE BY THE ASSESSING OFFICER, AS CONTENDED BY THE ASSESSEE COMPANY, APPEAR TO BE INCORRECT. THE ASSESSEE COMPANY VIDE ITS LETTER DATED 21ST APRIL, 2004, A DDRESSED TO THE ASSESSING OFFICER SOON AFTER THE RECEIPT OF THE IMPUGNED ASSESSMENT ORDER DATED 31ST MARCH, 2004 PASSED IN THE INSTANT CASE F OR THE ASSESSMENT YEAR 2001-02, REQUESTED THE ASSESSING OFFICER TO GIVE IT THE COPY OF THE STATEMENT ALLEGEDLY PREPARED BY THE AO AN D KEPT ON THE ASSESSMENT RECORDS, GIVING DETAILS OF PAYMENT OF COMMISSION IN THE RANGE OF 11 % TO 32.84% OF THE FREIGHT AMOUNTS. THE ASSESSING OFFICER DID NOT GIVE ANY REPLY TO THE SAID LETTER. EVEN IN THE COUR SE OF HEARING BEFORE THE LEARNED TRIBUNAL, WHEN THIS QUESTION WAS RAISED, THE LE ARNED CIT (DR) ALSO COULD NOT PRODUCE ANY STATEMENT AND/OR DETAIL TO P ROVE ANY OF THESE ALLEGATIONS MADE BY THE AO IN HIS IMPUGNED ASSESSMENT OR DER DATED 31ST MARCH, 2004 PASSED IN RESPECT OF THE ASSESSMENT YEAR 2001-02 , IN THE AFORESAID RESPECT. NO SUCH DETAILS AND/OR STATEMENTS WERE P RODUCED BEFORE THE TRIBUNAL ON BEHALF OF THE REVENUE. 62. IN THE CIRCUMSTANCES DISCUSSED HEREINABOVE, WE FIND THAT THE ASSESSEE COMPANY HAD MADE PAYMENT OF COMMISSION FOR SECURING THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 51 TRANSPORT BUSINESS ON A MINIMUM LEVEL AND THE COMMISSION PAID IS NOT AT ALL DISPROPORTIONATE TO THE FREIGHT RECEIVED IN RESPECT OF THE RELEVANT CONSIGNMENTS AS NOTED IN THE ACCOMPANYING CONSIGNMENT NOTES; THERE WERE NO SINGLE PAYMENT OF COMMISSION IN RESPECT OF SEVERAL CONSIGNMENTS BOOKED FROM DIFFERENT CLIENTELES ; AND THAT THE ALLEG ATIONS TO THE CONTRARY MADE BY THE ASSESSING OFFICER IN HIS IMPUGNED ASSESSMENT ORDE R DATED 31ST MARCH, 2004 PASSED UNDER SECTION 143(3) OF THE SAID A CT IN RESPECT OF THE ASSESSMENT YEAR 2001-02 ARE WHOLLY WILD, INCORRECT AND BASELESS. 63. IN THE COURSE OF THE HEARING BEFORE THIS TRIBU NAL, IT WAS INTER ALIA SUBMITTED BY THE LEARNED CIT(DR) ON BEHALF OF T HE REVENUE THAT THE ASSESSEE COMPANY DID NOT PRODUCE ALL THE VOUCHERS EVIDENCI NG COMMISSION PAYMENTS IN RESPECT OF EACH OF THE RELEVANT YEA RS. THE LEARNED COUNSEL FOR THE ASSESSEE AS NOTED ABOVE HAS COUNTER ED THIS OBSERVATION MADE ON BEHALF OF THE REVENUE AS WHOLLY I NCORRECT. IT IS THE CONTENTION OF THE ASSESSEE COMPANY THAT THERE ARE MORE TH AN FIFTY LAKH VOUCHERS EVIDENCING COMMISSION PAYMENTS IN THE RELEVANT YE ARS NOW UNDER APPEAL BEFORE THE LEARNED TRIBUNAL. IN COURSE O F THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY HAD TAKEN BEFORE THE ASSESSI NG OFFICER ALL ITS BOOKS OF ACCOUNTS ALONG WITH THE RELEVANT VOUCHERS AND DOCUMENTS THROUGH TRUCK LOADS. THE ASSESSING OFFICER HOWEVER EXAMINED SOME OF THE VOUCHERS BY WAY OF SAMPLE, AT HIS OWN OPTI ON, BY PICK AND CHOOSE METHOD. ALL THE VOUCHERS WERE AGAIN PRODUCED BEFO RE THE LEARNED CIT(A), WHO ALSO EXAMINED THE VOUCHERS BY WAY OF SAMPLE , AT HIS OWN OPTION, BY PICK AND CHOOSE METHOD. 64. IN THE CIRCUMSTANCES MENTIONED HEREINABOVE, WH ILE THE ASSESSEE COMPANY FILED ALL AFFIDAVITS IN RELATION TO THE ENTIRETY OF COMMISSION PAYMENTS MADE BY IT IN EACH OF THE RELEVANT Y EARS UNDER APPEAL, IN THE PAPER BOOKS FILED BEFORE THIS TRIBUNAL , THE ASSESSEE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 52 COMPANY GAVE PHOTOCOPIES OF SOME OF THE RECEIPTED VOUCHER S, BY WAY OF SAMPLE IN EACH OF THE RELEVANT YEARS. THE PHOTOCOPIES OF SUCH RECEIPTED VOUCHERS GIVEN WAY OF SAMPLE ARE AS UNDER: ASSESSMENT YEAR PAGE NO. OF THE PAPER BOOKS 2000-01 237-256 OF VOLUME - I 2001-02 236-305 OF VOLUME - I 2002-03 173-207 OF VOLUME - I 2003-04 257-289 OF VOLUME - I THE TAX AUTHORITIES HAVE NOT FOUND ANY DEFECT WHATSOEV ER IN ANY OF THE VOUCHERS EVIDENCING PAYMENT OF COMMISSION MADE BY THE ASSE SSEE COMPANY IN ANY OF THE YEARS UNDER APPEAL. 65. FURTHER, IN COURSE OF THE HEARING BEFORE THE TRIBUNAL, IT WAS SUBMITTED ON BEHALF OF THE REVENUE THAT THE ASSESSEE COMP ANY HAS BEEN MAKING PAYMENT OF COMMISSION ALL ALONG ONLY IN CASH. COUNTERING THIS SUBMISSION, IT IS SUBMITTED THAT THE AFORESAID CONTENTION MADE ON BEHALF OF THE REVENUE IS ALSO WHOLLY INCORRECT. WHILE THE SMALL PAYMENTS OF COMMISSION, WHICH ARE FAR BELOW THE LIMITS LAID DOWN IN SECTION 40A(3) OF THE INCOME-TAX ACT, 1961, WERE MADE IN CASH, THE PAYMEN TS EXCEEDING THE STATUTORY LIMITS WERE ALWAYS MADE THROUGH BANKING CHANNEL. IN FACT THE DETAILS OF SUCH PAYMENTS MADE THROUGH BANKING CHANN ELS IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06 APPEAR AT PAGE 45 OF THE PAPER BOOK FILED IN RESPECT OF ITA NO. 19/HY D/09, WHICH AMOUNTS WERE ALSO DISALLOWED BY THE ASSESSING OFFICER, AN D SUCH DISALLOWANCE WAS ALSO CONFIRMED ON FIRST APPEAL BY THE LE ARNED CIT(A) VIDE HIS IMPUGNED ORDER DATED 17TH OCTOBER, 2008 PASSED IN RESPECT OF THE ASSESSMENT YEAR 2005-06. THE ASSESSEE COMPANY, ACCORDING TO THE ASSESSEE, HAS DISPUTED EVEN SUCH DISALLOWANCE BEFORE THE TRI BUNAL. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 53 66. IN THE COURSE OF HEARING BEFORE THE TRIBUNAL, THE LEARNED CIT(DR) APPEARING FOR THE REVENUE HAD ALSO RELIED ON THE FOLLOWING TWO DECISIONS ON THE ISSUE RELATING TO DISALLOWANCE OF COMMISSIO N PAYMENTS: I. CIT V. NAVSARI COTTON AND SILK MILLS LTD. (1982) 135 ITR 546 (GUJ); II. CIT V. TARAPORVALA SONS CO. PVT. LTD. (1999) 239 ITR 319 (BOM) 67. IN CIT V. NAVSARI COTTON AND SILK MILLS LTD. (1982) 135 ITR 546 (GUJ) - COPY APPEARING AT PAGES 623-633 OF THE CO MPILATION OF CASE DECISIONS, VOLUME - V, THEIR LORDSHIPS OF THE HON'BLE GU JARAT HIGH COURT HAD LAID DOWN CERTAIN POSITIVE AND NEGATIVE TESTS, AS AR E SET OUT AND SUMMARIZED IN THE HEAD NOTES AT PAGES 546-547 OF THE RE PORTS. THE LD COUNSEL FOR THE ASSESSEE IN RELATION TO THIS DECISION SUB MITTED THAT THE ASSESSEE COMPANY SATISFIED EACH OF THE POSITIVE TESTS LAID DO WN IN THE SAID JUDGMENT; AND ITS CASE IS NOT COVERED BY ANY OF THE NEGATIVE TESTS LAID DOWN BY THE HONBLEBLE GUJARAT HIGH COURT THERE IN. 68. IN CIT V. TARAPORVALA SONS CO. PVT. LTD. ( 1999) 239 ITR 319 (BOM) - COPY APPEARING AT PAGES 634-637 OF THE COMPIL ATION OF CASE DECISIONS, VOLUME - V, THEIR LORDSHIPS OF THE HON'BLE BOM BAY HIGH COURT FOUND THAT THE TAX AUTHORITIES HAD NOT EXAMINED THE ISSUE WHETHER THE CASE OF THAT ASSESSEE WAS COVERED BY THE NEW EXPLANATION I NSERTED UNDER SECTION 37(1) OF THE SAID ACT WITH RETROSPECTIVE EFFECT 01 .04.1962. IN THAT VIEW OF THE MATTER, THE HON'BLE HIGH COURT HAD REMAN DED THE MATTER TO THE TRIBUNAL WITH A DIRECTION TO EXAMINE THE ISSUE IN THE LIGHT OF THE SAID EXPLANATION. 69. IN THE CASE OF THE ASSESSEE COMPANY HEREIN, THAT ASP ECT HAD ALREADY BEEN EXAMINED BY THE TAX AUTHORITIES BELOW. THE CASE OF THE ASSESSEE COMPANY HEREIN HAS, ALL ALONG, BEEN THAT THE PAY MENT OF ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 54 COMMISSION, IN THE INSTANT CASE, TO THE EMPLOYEES / REPRESE NTATIVES AND AGENTS OF THE PRIVATE SECTOR ENTERPRISES, ON WHOSE BEHALF THE CARGO WAS CARRIED BY THE ASSESSEE COMPANY TO DIFFERENT DESTINATIONS, DOES NOT FALL WITHIN THE CATEGORY OF 'EXTORTIONS, HAFTAS, BRIBES AND/ OR PROTECTION MONIES', WHICH ARE IN THE NATURE OF PAYMENTS FOR A PUR POSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW; AND WHICH ALONE FALL WITHIN THE PURVIEW OF THE NEW EXPLANATION INSERTED UNDER SECTION 37(1) OF THE SAID ACT. IN THAT VIEW OF THE MATTER, THE SAID DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TARAPORVALA'S CASE(SUPRA) HAS NO APPLICATION TO THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 70. NOW, WE HAVE TO EXAMINE WHETHER THE PAYMENT OF COMMISSION IS OPPOSED TO PUBLIC POLICY OR NOT. THE LD. A R PLEADED THAT THERE IS NO SINGLE INCIDENT OF PAYMENT OF COMMISSION TO A NY GOVERNMENT EMPLOYEES OR EMPLOYEES OF PUBLIC SECTOR UNDERTAKING WHI CH VIOLATES THE PROVISIONS OF LAW TO DISALLOW THE SAME. IN THIS REGARD THE RELIANCE WAS PLACED BY DR ON THE JUDGEMENT OF ORISSA HIGH COURT IN THE CASE OF TARINI TARPAULIN PRODUCTIONS V/S CIT ( 254 ITR 495) WHERE IN HELD THAT SECRET COMMISSION ALLEGED TO HAVE BEEN PAID BY THE ASSESSEE TO PE RSONS WHOSE NAME IT COULD NOT DISCLOSE WAS NOT ALLOWABLE AS DEDUCTION IN VIEW EXPLANATION TO S. 37(1) INSERTED WITH RETROSPECTIVE EFF ECT. IN THE CASE BEFORE ORISSA HIGH COURT THE SECRET COMMISSION WAS PAID TO GOVERNMENT EMPLOYEES AS SUCH IT WAS DISALLOWED BEING AN OFFENCE OR WH ICH OPPOSED TO PUBLIC POLICY. BUT IN THE PRESENT CASE BEFORE US, NO PAYMENT WERE MADE TO GOVERNMENT EMPLOYEES OR AGENCY. 71. WE HAVE ALSO GONE THROUGH THE MEMORANDUM EXPLA INING THE PROVISIONS OF EXPLANATION TO SECTION 37 WHICH READS AS FO LLOWS: ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 55 [EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PUR POSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE.] 72. IT IS PROPOSED TO INSERT AN EXPLANATION AFTER SUB SECTION (1) OF SECTION 37 TO CLARIFY THAT NO ALLOWANCE SHALL BE MADE I N RESPECT OF AN EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW. THIS PROPOSED AMENDMENT WILL RESULT IN DISALLOWANCE OF CLAIM MADE BY CERTAIN TAXPAYER OF PAYM ENTS ON ACCOUNT OF PROTECTION MONEY, EXTORTION, HAFTA, BRIBES ETC., AS BUSINESS EXPENDITURE. THIS AMENDMENT WILL TAKE EFFECT FROM 1 ST APRIL 1962 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 1962-63 AND SUBSEQUENT YEAR. 73. THE INTENTION OF ABOVE EXPLANATION IS TO DISA LLOW THE EXPENDITURE INCURRED BY THE ASSESSEE FOR ANY PURPOSE WHI CH IS AN OFFENCE OR PROHIBITED BY LAW. THEREFORE, WE HAVE TO EXAMINE WHETHER THE PAYMENT OF COMMISSION TO THE EMPLOYEES/ AGENTS/ REPRE SENTATIVES OF THE PRIVATE COMPANIES FOR BOOKING THE CONSIGNMENTS IS AN OFF ENCE OR IS PROHIBITED BY ANY LAW. 74. AS DISCUSSED EARLIER, JUDGEMENT OF JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS KODANDARAMA & CO ( 144 ITR 395) HA S NO APPLICATION TO THE FACTS OF PRESENT CASE. IN THAT CASE, ASSESSEE, A DEA LER IN PADDY, RICE ETC; CLAIMED THE PAYMENT MADE TO ANDHRA PRADESH WE LFARE FUND AS BUSINESS EXPENDITURE U/S 37(1) OF THE ACT. ASSESSEE CLAIMED T HAT UNLESS THE SAID PAYMENT TO THE WELFARE FUND WAS MADE, NO PER MIT FOR EXPORT OF RICE TO THE STATE OF KERALA WOULD BE ISSUED BY DISTRICT COLLECTOR. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE PAYMENT ON THE GROUN D THAT THE SAID ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 56 EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE HIGH COURT FOUND THAT FOR THE PURPOSE OF GRANTING PERMISSION TO EXPORT OF RICE TO KERALA THE COLLECTOR IMP OSED THE CONDITIONS THAT THE ASSESSEE HAS TO DEPOSIT PARTICULAR AMOUR TO THE WELFARE FUND. THAT THE GRANT OF THE PERMIT IS GOVERNED BY SOUTHERN STATES REGULATION OF EXPORT OF RICE ORDER 1964. UNDER THE ABOVE SAID REGUL ATION, THE GRANT OF PERMIT HAS TO BE MADE BY THE COLLECTOR ON A REASONABLE AND FAIR BASIS HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE DISTRI CT AND STATE, AS CASE MAY BE. IT IS NOT OPEN TO THE DISTRICT COLLECTOR OR ANY OTHER AUTHORITIES FOR THAT MATTER TO IMPOSE THE CONDITIONS TH AT THE GRANT LICENCE SHALL BE CONDITION OF MAKING PARTICULAR CONTRIBUTION T O PARTICULAR FUND. SINCE THE REGULATION DOES NOT PERMIT THE COLLECTOR TO P UT THE CONDITION ON PERMIT, THE HIGH COURT FOUND THAT IT WAS AGAINST THE PROVISIONS OF LAW AND OPPOSED TO THE PUBLIC POLICY. IN THE PRESENT CASE THE PA YMENT OF COMMISSION IS NOT TO ANY GOVERNMENT EMPLOYEES AND IT IS P AID TO EMPLOYEES OF PRIVATE COMPANIES FOR BOOKING CONSIGNMENTS A ND IT IS NOT AGAINST THE PROVISIONS OF ANY OF THE LAW AND IT IS NOT AN OFFENCE UNDER ANY LAW OF THE LAND. HENCE, THE JUDGEMENT IN THE CASE OF KO NDANDARAMA & CO IS NOT APPLICABLE TO THE FACTS OF PRESENT CASE. 75. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGEM ENT IN THE CASE OF SIGMA PAINTS CITED SUPRA WHERE IN HELD THAT DEDU CTIBILITY OF SECRET COMMISSION PAYMENTS UNDER S. 37(1) IS A QUESTION OF FACT. F URTHER, IT WAS HELD THAT DEDUCTION COULD BE ALLOWED ON THE BASIS OF G OOD AND COGENT MATERIAL. THIS JUDGEMENT WAS CONSIDERED BY JURISDICTIONAL HIGH COURT WHILE DELIVERING THE ASSESSEES CASE FOR ASSESSMENT YEARS 181-1 82 TO 184-185. JUDGMENT WAS DISTINGUISHED BY JURISDICTIONAL HIGH COURT ON TWO REASONS VIZ., (1) THE ASSESSEE HAS NOT ESTABLISHED THE PAYME NT ITSELF FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85 (2) IT IS NOT THE CASE OF THE ASSESSEE THAT THE PARTICULARS OF PERSON TO WHOM THE COMMISSI ON WAS PAID ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 57 COULD NOT BE SUPPLIED WITHOUT DETRIMENTAL TO THE BUSI NESS OF THE ASSESSEE HAVING REGARD TO THE NATURE OF TRANSPORT CARGO. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMS RIGHT FROM THE ASSESSING OFF ICER THAT THE DETAILS OF THE ADDRESSES OF THE PERSONS TO WHOM THE COMMI SSION WAS PAID COULD NOT BE FURNISHED WITHOUT DETRIMENTAL TO THE BUSI NESS OF THE ASSESSEE HAVING REGARD TO NATURE OF TRANSPORTATION OF CAR GO. ON THE OTHER HAND, THE PAYMENT OF COMMISSION IS EVIDENCED BY V OUCHERS SIGNED BY THE RECIPIENTS. THE VOUCHERS ARE HAVING ALL THE NECE SSARY PARTICULARS AND THE CONSIGNMENT NOTE. THE COPY OF CONSIGNMENT NOTE IS ENCLOSED WITH EACH VOUCHER. IN OUR OPINION, THE PAYMENT FOR T HE YEAR UNDER CONSIDERATION HAS BEEN ESTABLISHED BY THE ASSESSEE BY PRODUCI NG THE VOUCHER SIGNED BY THE RECIPIENT, CONSIGNMENT NOTE AND AF FIDAVIT OF 79 REGIONAL MANAGERS BEFORE LOWER AUTHORITIES. THEREFORE , AS RIGHTLY OBSERVED BY JURISDICTIONAL HIGH COURT IS BURDEN OF PROOF HAS BEEN DISCHARGED BY THE ASSESSEE BY PRODUCING AUDITED BOOKS OF ACCO UNTS, PAYMENT VOUCHERS AND OTHER DOCUMENTS GIVING FULL DETAI LS AS TO THE NATURE OF TRANSACTIONS WHICH NECESSITATED THE PAYMENT OF SU CH COMMISSION, INCLUDING THE AFFIDAVITS SWORN BY THE REGIONA L/ ZONAL/DIVISIONAL/ AREA/ CONTROLLING MANAGERS, OPERAT IONAL HEADS VIZ. VICE PRESIDENTS AND SENIOR EXECUTIVES ETC., DECLARING, INTER A LIA, ON OATH THAT THE COMMISSION PAYMENTS WERE ACTUALLY AND FACTUALLY MADE BY THE ASSESSEE BY WAY OF INCENTIVES TO THE EMPLOYEES/ AGENTS/ R EPRESENTATIVES OF CUSTOMERS WHO BROUGHT IN CARGO TO THE ASSESSEE COMPANY FOR BOOKING; AND THAT THIS WAS AN ACCEPTED NORM AND ESTAB LISHED TRADE PRACTICE IN THE TRANSPORT BUSINESS; AND THAT WITHOUT SUCH PAYMENT, IT WAS NOT POSSIBLE TO SURVIVE IN THIS LINE OF BUSINESS, AS WE LL AS THE PREVALENT TRADE PRACTICE IN THE LINE OF BUSINESS CARRIED ON BY THE ASSESSEE COMPANY ALL ALONG. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 58 76. IT MAY ALSO FOUND THAT IN EARLIER YEARS WHICH WERE CONSIDERED BY JURISDICTIONAL HIGH COURT, THE TOTAL COMMISSION PAYM ENT WAS NEVER DISALLOWED. THE AMOUNT OF COMMISSION DISALLOWED IN THOS E YEARS RANGED FROM 9.45% TO 11.98% OF THE AGGREGATE FREIGHT RECEIV ED BY THE ASSESSEE COMPANY IN EACH OF THE RELEVANT YEARS. BEING SO, THERE IS NO MERIT IN THE ARGUMENTS OF LD. DR THAT ENTIRE COMMISSION PAYMENT TO B E DISALLOWED IN THESE ASSESSMENTS UNDER CONSIDERATION BEFORE US. 77. WE HAVE ALSO CAREFULLY GONE THROUGH ORDER OF THIS TRIBUNAL IN ITA NO. 544/HYD/2006 DATED 28-9-2007 IN THE ASSESSEES OW N CASE FOR THE ASSESSMENT YEAR 2001-2002. IN THAT THE ASSESSEE HAS CHALL ENGED THE ORDER PASSED UNDER SECTION 263 OF INCOME TAX ACT BY COMMI SSIONER OF INCOME TAX. BEFORE THE TRIBUNAL THE ASSESSEE CONTENDED THAT THE CIT CANNOT INVOKE THE PROVISIONS OF SECTION 263 OF THE IN COME TAX ACT TO CONSIDER THE PAYMENT COMMISSION AS THE SAME ISSUE WAS SUBJECT MATTER OF AN APPEAL FILED BEFORE CIT(A) U/S 250 OF THE I NCOME TAX ACT. THIS CONTENTION OF THE ASSESSEE WAS APPROVED BY THE TRIBUNAL B Y HOLDING THAT THE ISSUE OF GENUINENESS OF THE COMMISSION PAYMENT WAS SUBJE CT MATTER OF THE APPEAL BEFORE THE CIT(A), HENCE, THE CONCERNED CIT IS NOT JUSTIFIED IN INVOKING HIS REVISION POWERS IN RESPECT OF AN ISSUE WHI CH WAS SUBJECT MATTER OF AN APPEAL BEFORE CIT(A).NOW, COMING TO THE PRESENT ASSESSMENT YEARS UNDER CONSIDERATION BEFORE US, THE ISSUE IS R ELATING TO THE GENUINENESS OF PAYMENT OF COMMISSION. IN THESE ASSESSMENT YEARS, THERE IS DISTINGUISHING FACTS IN RESPECT OF THE MATERIAL AVAILABLE ON RECORD WHEN COMPARED TO ASSESSMENT YEAR 2001-02 AND ASSESSMENT YEA RS 1981-82 TO 1984-85. 78. FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85 THE VOUCHERS WERE SIGNED BY THE ASSESSEES OWN EMPLOYEES. THEREFORE, THE ASSESSING OFFICER DISALLOWED A PORTION OF THE COMMISSION. THE HIGH COURT FOUND THAT ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 59 THE ASSESSEE HAS NOT SUBSTANTIATED THE PAYMENT OF COMMISSION. THUS, THE HIGH COURT CONFIRMED THE PARTIAL DISALLOWANCE MADE BY THE AO ON ESTIMATED BASIS. IT NEEDLESS TO SAY THAT THE TRIBUNAL ON EARLIER OCCASION WHILE ADJUDICATING THE APPEAL INN ITA NO. 544/HYD/200 6 NOT DECIDE THE ISSUE RELATING TO GENUINENESS OF PAYMENT OF COMMISSION. I T IS ONLY CONCERNED WITH THE POWER OF THE CIT TO INVOKE PROVISIO NS OF SECTION 263 WHEN SAME ISSUE SUBJECT MATTER OF APPEAL FILED THIS ASSESSEE BEFORE CIT(A). ON THE OTHER HAND FOR ASSESSMENT YEAR 2001-200 2 BOTH THE ASSESSEE AND REVENUE IS IN APPEAL BEFORE US AND CHALLENGED THE GENUINENESS OF PAYMENT OF COMMISSION AND WHICH SHALL BE RE QUIRED TO ADJUDICATED BY US. 79. NOW, WE HAVE TO EXAMINE WHETHER THE PAYMENT OF COMMISSION IS REASONABLE OR IT IS EXCESSIVE COMPARED TO NATU RE OF BUSINESS. THE ASSESSEE FILED A STATEMENT SHOWING THE FACTUA L BACKGROUND IN REGARD TO THE FREIGHT RECEIPT, THE COMMISSION PAID B Y THE ASSESSEE COMPANY, PERCENTAGE PAID WITH REFERENCE TO THE FREIGHT RECEIPTS, THE AMOUNT DISALLOWED BY THE LOWER AUTHORITIES AND THE AM OUNT OF DISALLOWANCE SUSTAINED BY THE TRIBUNAL IN THE RESPECTIVE YEARS: A.Y. FREIGHT INCOME (RS.) COMMISSION PAID (RS.) % OF COMMISSION ON FREIGHT DISALLOWED BY AO (RS.) SUSTAINED BY CIT(A) (RS.) SUSTAINED BY ITAT (RS.) 1976-77 123835249 1075410 0.87 15000 8000 7000 1977-78 130256082 1457766 1.12 25000 12000 10000 1978-79 144952475 2116115 1.46 35000 18000 10000 1979-80 177786531 2726604 1.53 12000 12000 NO APPEAL 1980-81 232095990 4560521 1.96 12000 12000 NO APPEAL 1981- 82` 289773217 11852724 4.09 1285656 1285656 50000 1982-83 354292813 11847846 3.34 1420531 1420531 500 00 1983-84 550238000 11842204 2.15 1275229 1275229 500 00 1984-85 628096000 13322009 2.12 1259807 1259807 500 00 1985-86 548102056 14107711 2.57 3519156 458645 NIL 1986-87 605510389 12831004 2.12 2561377 50000 NIL 1987-88 684193743 14485319 2.12 7966905 50000 NIL 1988-89 733026200 17428188 2.38 11930493 50000 5000 0 ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 60 1989-90 1552015711 25961834 1.67 9993960 NIL NIL 1990-91 1103139302 17634708 1.60 NIL NIL NIL 1991-92 1318027959 18485926 1.40 NIL NIL NIL 1992-93 1525197305 20469689 1.34 NIL NIL NIL 1993-94 1729626762 21001371 1.21 NIL NIL NIL 1994-95 2115997389 24977221 1.18 NIL NIL NIL 1995-96 2631508627 29329341 1.11 NIL NIL NIL 1996-97 2895854178 30554341 1.06 NIL NIL NIL 1997-98 2699820800 35210513 1.30 NIL NIL NIL 1998-99 3121427641 42315219 1.36 NIL NIL NIL 1999-00 3507633882 43395767 1.24 NIL NIL NIL 2000-01 4036049311 46998868 1.16 46998868 9399774 2001-02 4515078301 51528011 1.14 7729201 2576400 2002-03 4680942289 52116149 1.11 7817422 52116149 2003-04 4700477024 47159038 1.00 47159038 9431808 2004-05 5540668903 45979292 0.83 45979292 45979292 2005-06 6153035812 29724985 0.48 29724985 29724985 DISPUTED IN THE INSTANT APPEAL 80. WE HAVE COMPARED THE ABOVE DISALLOWANCE WITH D ISALLOWANCE MADE IN THE ASSESSMENT YEARS 1981-82 TO 1984-85 WHICH WE RE CONSIDERED BY JURISDICTIONAL HIGH COURT IN ASSESSEE OWN CASE IS MENTIONED BELOW- A.Y. FREIGHT INCOME (RS.) COMMISSION PAID (RS.) % OF COMMISSION ON FREIGHT DISALLOWED BY AO (RS.) % OF DISALLOWANCE MADE BY AO 1981-82 289773217 11852724 4.09 1285656 10.84 1982-83 354292813 11847846 3.34 1420531 11.98 1983-84 550238000 11842204 2.15 1275229 10.76 1984-85 628096000 13322009 2.12 1259807 9.45 81. IT IS TO BE NOTED THAT HIGH COURT HAS CONFIRMED THE DISALLOWANCE FOR THE ASSESSMENT YEARS 1981-2, 1982-83,1983 -84 AND 1984-85 AT THE RATE OF 10.84%, 11.98%, 10.76% AND 9.45% OF FREIGHT RECEIPTS RESPECTIVELY FOR THESE YEARS. 82. NOW, OUT OF THE FIVE YEARS NOW UNDER APPEAL BEFORE US, THE ASSESSING OFFICER HAD DISALLOWED 15% OF THE AGGREGATE COM MISSION PAID BY THE ASSESSEE COMPANY IN THE ASSESSMENT YEAR 2001-02. THE LEARNED CIT(A) HAS SUSTAINED DISALLOWANCE TO THE EXTENT OF 5% OF THE AGGREGATE COMMISSION PAID IN THAT YEAR. BOTH THE DEPARTMENT AS A LSO THE ASSESSEE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 61 ARE IN APPEAL ON THIS ISSUE BEFORE US. FOR THIS ASSESSMENT YEAR 2001-02, THERE IS REASSESSMENT PROCEEDINGS THROUGH WHICH THERE IS AL LOWANCE OF 100% COMMISSION PAYMENT AGAINST WHICH THE ASSESSEE IN APPEA L BEFORE US ON REOPENING AND ALSO CHALLENGING THE 100% DISALLOWA NCE OF COMMISSION PAYMENT. 83. FOR THE ASSESSMENT YEARS 2000-01 AND 2003-04, TH E ASSESSING OFFICER HAD DISALLOWED 100% OF THE COMMISSION PAYM ENT. THE CIT(A) HAD SUSTAINED THE DISALLOWANCE OF COMMISSION AT 20 %. BOTH THE ASSESSEE AS WELL AS DEPARTMENT IS IN APPEAL BEFORE US. 84. FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSING OFFI CER HAD DISALLOWED 15% OF AGGREGATE COMMISSION PAID BY ASSESSEE COMP ANY. THE CIT(A), ENHANCED SUCH DISALLOWANCE TO 100%. THE ASSESSE E IS IN APPEAL BEFORE US. 85. FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06, T HE ASSESSING OFFICER HAD DISALLOWED 100% OF THE COMMISSION PAID BY THE ASSESSING OFFICER. THE SAME WAS CONFIRMED BY CIT(A) ON APP EAL BY ASSESSEE. 86. WE HAVE GONE THROUGH THE ABOVE DISALLOWANCES M ADE BY LOWER AUTHORITIES. THERE IS NO UNIFORM DISALLOWANCE IN THESE ASSESSMENT YEARS THOUGH THE FACTS AND CIRCUMSTANCES IN ALL THESE ASSESSME NT YEARS SIMILAR. CONSIDERING JUDGEMENT OF JURISDICTIONAL HIGH COURT, IN OUR OPINION THE PAYMENT COMMISSION IS EXCESSIVE AND IT WARRAN TS DISALLOWANCE. WE HAVE ALSO COMPARED THE COMMISSION PAYMEN T IN SIMILAR LINE BUSINESS WHICH CAN BE SEEN FROM BELOW MENTION STATEME NT: ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 62 (RS. IN LAKHS) TRANSPORT OPERATOR FY FREIGHT INCOME PROFIT BEFORE TAX % OF PROFIT TO FREIGHT INCOME COMMISSION % OF COMMISSION TO FREIGHT INCOME 2001-02 11259.61 82.97 0.74 SEE NOTE (1) 2002-03 11216.01 21.01 0.19 SEE NOTE (1) A. PATEL ROADWAYS LTD., 2003-04 11865.63 51.34 0.43 SEE NOTE (1) 2001-02 16264.38 248.32 1.53 64.12 0.39 2002-03 17174.37 246.48 1.44 54.29 0.32 2003-04 20457.46 207.58 1.01 76.66 0.37 B. ASSOCIATED ROAD CARRIERS LTD. 2004-05 24875.48 205.10 SEE NOTE (II) 0.82 85.51 0.34 1999-00 10884.41 200.61 1.84 133.56 1.23 C ABC INDIA LTD. 2000-01 10675.52 160.30 1.50 167.54 1.57 2002-03 3143.71 232.08 7.38 2003-04 3201.32 237.30 7.41 D. SRI RAMDAS MOTOR TRANSPORT LTD. 2004-05 3554.71 SEE NOTE (III) 255.96 7.20 1999-00 40360.49 745.96 1.85 469.99 1.16 2000-01 45150.78 830.26 1.84 512.28 1.13 2001-02 46809.42 764.26 1.63 521.16 1.11 2002-03 47004.77 911.76 1.94 471.59 1.00 2003-04 55406.69 1188.34 2.14 459.79 0.83 E TRANSPORT CORPORATION OF INDIA LTD. THE ASSESSEE COMPANY HEREIN 2004-05 61530.35 1523.68 2.48 297.25 0.48 NOTES: I. PATEL ROADWAYS LTD., HAS NOT DISCLOSED THE AMOUNT O F COMMISSION SEPARATELY. IT IS STATED IN THE NOTES ON ACCOUNTS (PARA 2 C II) THAT THE FREIGHT INCOME IS AFTER DEDU CTION OF BOOKING COMMISSION. II. PROFIT BEFORE TAX OF ASSOCIATED ROAD CARRIERS LTD., FOR THE FINANCIAL YEARS 2001-02 AND 2003-04 IS AFT ER DEDUCTION OF RS. 40.57 LAKHS AND RS. 50.34 LAKHS RESPECTIVELY BE ING PROFIT ON SALE OF INVESTMENTS. III. THE PRINCIPAL BUSINESS OF SRI RAMDAS MOTOR TRANSPOR T LTD., IS SALE OF NEW VEHICLES AND MANUFACTURE OF MOTOR PARTS. THE FREIGHT INCOME IS 17.84%, 17.09% AND 13.53% OF THE TOTAL TURNOVER FOR THE FINANCIAL YEARS 2002-03, 2003-04 AND 2004-05 RESPECTIVELY. HENCE THE TURNOVER AND PROFI TS ARE NOT COMPARABLE. 87. BY TAKING INTO CONSIDERATION THE CIRCUMSTANCES IN WHICH THE COMMISSION WAS PAID, THE COMMISSION PAID FOR EARLIER ASSESSME NT YEARS AND THE COMMISSION PAID BY SIMILAR COMPANIES IN SIMILAR CIRCUMSTANCES AND REASONABLENESS OF THE PAYMENT, IN OUR OPINION, WE CAN DEFINITELY QUANTIFY THE EXCESSIVE PAYMENT OF COMMISSION AT 15% OF T HE TOTAL COMMISSION PAID BY THE ASSESSEE FOR THESE ASSESSMENTS YEARS UNDE R CONSIDERATION BEFORE US. THIS DISALLOWANCE AT 15% OF TOTA L COMMISSION PAID BY THE ASSESSEE WOULD MEET THE ENDS OF JUSTICE. ACCOR DINGLY, WE DIRECT THE ASSESSING OFFICER TO DISALLOW ONLY 15% COMMISSION PAID THE ASSESSEE AS EXCESSIVE IN THESE ASSESSMENT YEARS AS INADMISSIBLE. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 63 88. THE NEXT ISSUE INVOLVED IN THE APPEALS OF THE DEP ARTMENT, BEING ITA NO.794/HYD/2007 FOR ASSESSMENT YEAR 2000-01 AND ITA NO.2 1/HYD/2005 FOR ASSESSMENT YEAR 2001-02, RELATE TO DISALLOWANCE OF INTER EST ON BORROWED FUNDS ON NOTIONAL BASIS. 89. FACTS OF THE CASE IN BRIEF RELATING TO THIS ISSUE AR E THAT THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT UNDER S.143(3) READ WITH S.147 FOR THE ASSESSMENT YEAR 2000-01 OBSERVED THAT THE ASSESSEE COMPANY H AD PAID A SUM OF RS.3,00,00,000 BY WAY OF ADVANCE TO M/S. TCI INDUSTR IES LTD. (EARLIER KNOWN AS TRANSPORT CORPORATION OF INDIA) IN TERMS OF MEMORAN DUM OF UNDERSTANDING DATED 15 TH MARCH, 1999. THE SAID COMPANY OWNED A MANUFACTURING UN IT AT COLABA MUMBAI, MORE POPULARLY KNOWN AS MUKESH TEXTILE MILLS, WHICH WAS CLOSED IN 1982. THE SAID COMPANY WAS DESIROUS OF DEVELOPI NG THE LANDED PROPERTY FORMING PART OF THE SAID TEXTILE MILLS BY CON STRUCTING A MULTI-STOREYED BUILDING THEREON. THE ASSESSEE-COMPANY WAS ADMITTEDLY TRY ING TO BUY 25,000 SQ. FT. IN THE SAID BUILDING COMPLEX, AND FOR BOOKING THE SAID SPACE, IT ADVANCED THE AGGREGATE SUM OF RS.2,20,00,000 AND NOT RS.3,00,00 ,000, AS INCORRECTLY ALLEGED BY THE ASSESSING OFFICER, TO M/S. TCI INDUSTRIES L TD. IT WAS PROVIDED IN THE SAID MOU THAT POSSESSION OF THE PREMISES WOULD BE GIVE N TO THE ASSESSEE COMPANY ON OR BEFORE 31 ST OCTOBER, 2001 AND IF THE DELIVERY CANNOT BE GIVEN BY THE AFORESAID DATE, M/S. TCI INDUSTRIES, THE OWNER WOU LD BE ENTITLED TO REASONABLE EXTENSION OF TIME. THE ASSESSING OFFICER FURTHE R STATED THAT SAID MOU WAS CANCELLED AND THE ENTIRE AMOUNT WAS REFUNDED TO THE ASSESSEE COMPANY IN THE SUBSEQUENT YEARS. THE ASSESSING OFFICER WA S OF THE VIEW THAT HUGE AMOUNT OF BORROWED FUNDS WERE DIVERTED BY THE ASSESSEE TO ITS GROUP CONCERN, M/S. TCI INDUSTRIES LTD., IN THE GUISE OF ADVANCE FOR PURCHASE OF OFFICE SPACE IN THE MULTI-STOREYED COMPLEX, WHICH WAS YET TO BE CONSTRUCTED. SINCE THE LOANS AND LIABILITY OF THE ASSESSEE AS PER BALANCE SH EET WERE MORE THAN THE SHARE CAPITAL AND RESERVES, THE ASSESSING OFFICER CONCLUDED T HAT THE SOURCE FOR ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 64 MAKING THE ADVANCE TO M/S. TCI INDUSTRIES LTD., MUST BE TAKEN TO BE BORROWED FUNDS. THE PURPOSE OF THE ADVANCE WAS FOR ACQUIRING A CAPITAL ASSET. THE ASSESSEE COMPANY PAID HUGE SUM OF INTEREST TO SECURED AND UN SECURED LOAN CREDITORS. THEREFORE, INTEREST ATTRIBUTABLE TO LOAN F UNDS DIVERTED TO SISTER CONCERN FOR ACQUIRING A CAPITAL ASSET HAS TO BE DISALLOWED. ON TAT BASIS THE ASSESSING OFFICER CALCULATED INTEREST AT 12% ON THE OPENING BALANCE FO RS.1,52,27,202 AND THE CLOSING BALANCE OF RS.1,23,51,22 9 IN THE LEDGER ACCOUNT OF M/S. TCI INDUSTRIES LTD., AS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. ON THAT BASIS, HE DISALLOWED AS NOTIO NAL INTEREST IN THE SUM OF RS.16,00,000 IN THE ASSESSMENT YEAR 2000-01 AND A NOTHER SUM OF RS.48,00,000 CALCULATED AT 16% ON THE ORIGINAL ADVANCE OF RS.3,00,00,000 IN THE ASSESSMENT YEAR 2001-02. 90. ON APPEAL, THE CIT(A) DELETED THE SAID AMOUNTS OF DISALLOWANCE MADE OUT OF THE DEDUCTION TOWARDS INTEREST CLAIMED BY T HE ASSESSEE FOR BOTH THE YEARS. AGGRIEVED BY THE ORDERS OF THE CIT(A) FOR THE ASSESSMENT YEAR 2000-01 AND 2001-02, REVENUE PREFERRED THE PRESENT A PPEALS. 91. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE ORDERS OF ASSESSING OFFICER, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER FO R THESE YEARS. 92. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H AND, TAKING US THROUGH THE RELEVANT PAGES OF THE PAPER-BOOK, INCLUDI NG THE AUDITED BALANCE SHEETS AS ON 31.3.1999 AND 31.3.2000, SUBMITTED THAT T HE AGGREGATE AMOUNTS ADVANCED BY THE ASSESSEE COMPANY TO M/S. TCI INDUSTRIES L TD. DURING THE PERIOD 31.3.199 TO 21.8.2000 AGGREGATING IN ALL TO RS.2.21 CRORES, WAS FAR BELOW THE ASSESSEES OWN FUNDS, AND THE SAME FORMED INSIGNI FICANT PART OF THE ASSESSEE COMPANYS SHARE CAPITAL AND RESERVES. IT IS SUBMITTED THAT THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 65 ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD T O PROVE THAT THE ADVANCES MADE BY THE ASSESSEE COMPANY FOR THE PROPOSED ACQUI SITION OF OFFICE PREMISES WAS IN ANY WAY RELATED TO TEE BORROWED FUNDS. THERE IS NO DIRECT NEXUS BETWEEN THE AMOUNT BORROWED BY THE ASSESSEE COMPANY AND THE AMOUNTS ADVANCED BY IT TO THE GROUP CONCERN IN QUESTION . IN THIS VIEW OF THE MATER, IT IS SUBMITTED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS V/S. CIT(288 ITR 1)(SC) CLEARLY S UPPORTS THE CASE OF THE ASSESSEE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, W HICH IS NOT JUSTIFIED, WAS CORRECTLY DELETED BY THE CIT(A). HE ALSO P LACED RELIANCE IN THIS BEHALF, ON THE FOLLOWING DECISIONS- (A) MUNJAL SALES CORPORATION V/S. CIT(298 ITR 298)-SC (B) CIT V/S. TIN BOX CO.(260 ITR 7637)-DEL (C) SMT. CHANCHAL KATYAL V/S. CIT (298 ITR 182)-ALL (D) CIT V/S. SAMBANDHAM SPINNING MILLS LTD. (298 ITR 306) -MAD. IT IS FURTHER CONTENDED THAT THE ASSESSEE COMPANY INTENDE D TO ACQUIRE THE PROPOSED NEWLY CONSTRUCTED OFFICE PREMISES WHOLLY AND EXCLU SIVELY FOR ITS COMMERCIAL LAND BUSINESS PURPOSE, AND IT IS BY NOW WELL SET TLED THAT INTEREST ON MONIES BORROWED FOR PURCHASE OF CAPITAL ASSETS, IN AN EXIST ING CONTINUING BUSINESS CONCERN, DOES NOT BECOME A CAPITAL EXPENDITURE, WH ETHER OR NOT THE CAPITAL ASSERT IN QUESTION IS USED FOR THE PURPOSES OF BUSIN ESS DURING THE RELEVANT YEAR. IN THIS BEHALF, RELIANCE IS PLACED ON THE FOLLOWING DECISIONS- (A) JCIT VS. UNITED PHOSPHOROUS LTD. (299 ITR 9)-SC (B) ACIT V/S. ARVIND PLOYCOT LTD. (299 ITR 12)-SC (C) DCIT V/S. GUJARAT ALKALIES AND CHEMICALS LTD. (299 ITR 85)-SC ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 66 93. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES, AND OTHER MATERIAL A VAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE CASE-LAW RELIED UPON BY THE PARTIES BEFORE US. THERE IS NO DISPUTE REGARDING FACT THAT THE ASSESSEE HAS ADVANCED THE MONEY FOR THE PURPOSE OF ACQUIRING OFFICE PREMISES F ROM TCI INDUSTRIES LTD AND ENTERED INTO MOU ON 15 TH MARCH 1999 AND TOTAL AMOUNT ADVANCED WAS AT RS. 2,20,00,000/- AND NOT RS. 3, 00,00,000/-. IT WAS PROVIDED IN THE SAID MOU THAT THE POSSESSION OF THE P REMISES WOULD BE GIVEN TO THE ASSESSEE COMPANY ON OR BEFORE 31 ST OCTOBER 2001; AND IF THE DELIVERY CANNOT BE GIVEN BY THE AFORESAID DATE M/ S TCI INDUSTRIES LTD; THE OWNER WOULD BE ENTITLED TO REASONABLE EXTEN SION OF TIME. THE PURPOSE OF ADVANCE OF THE FOR THE PURPOSE OF BUSINESS AND THAT IS FOR THE PURPOSE OF ACQUIRING A BUSINESS PREMISE IN COURSE OF BUSI NESS ACTIVITY AND BEING SO, EVEN THE INTEREST PAID ON BORROWED FUNDS I S ALLOWABLE AND THERE CANNOT BE ANY DISALLOWANCE ON NOTIONAL BASIS. WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE. GROUNDS OF THE REVENUE ON TH IS ISSUE ARE REJECTED. 94. THE NEXT COMMON ISSUE ARISING OUT OF THE DEPARTM ENTAL APPEALS, ITA NO.794/HYD/2007 FOR ASSESSMENT YEAR 2000-01; ITA NO. 21/HYD/2005 FOR ASSESSMENT YEAR 2001-02; AND IN ITA NOI.795/HYD/2007 FOR THE ASSESSMENT YEAR 2003-04 RELATE TO TREATMENT OF LOSS ARISING ON SA LE OF SHARES, ALLEGED TO BE SPECULATIVE LOSS, UNDER EXPLANATION TO S.73 OF THE ACT. 95. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE COMPA NY HAD PURCHASED ON DIFFERENT DATES 10,86,493 SHARES OF TCI INF RASTRUCTURE FINANCE LTD. DURING THE FINANCIAL YEARS 1996-97 AND 1997-98 B Y WAY OF INVESTMENT. FURTHER, THE ASSESSEE COMPANY HAD ALSO PURCHASED ON DIFFERE NT DATES 50,00,000 SHARES OF WHEELS INTERNATIONAL LTD. DURING T HE FINANCIAL YEAR 1996-97 ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 67 BY WAY OF INVESTMENT. THE SHARES OF EACH OF THE SAID TWO COMPANIES WERE SOLD BY THE ASSESSEE COMPANY DURING THE PERIOD FROM JULY, 199 9 TO FEBRUARY, 2000, WHICH IS WITHIN THE FINANCIAL YEAR 1999-2000 CORRESPOND ING TO ASSESSMENT YEAR 2000-01. TAKING INTO CONSIDERATION THE INDEXED COST OF ACQUISITION IN TERMS OF THE SECOND PROVISO TO S.48 OF THE ACT, THE ASSESSEE COMPANY RETURNED A LONG TERM CAPITAL LOSS, ASSESSABLE TO TAX UNDER S.45 OF THE ACT IN THE AGGREGATE SUM OF RS.40,88,440, ARISING TO IT ON SALE OF THE AFORESAID SHARES OF EACH OF THE SAID TWO COMPANIES. 96. SIMILARLY, THE ASSESSEE COMPANY HAD PURCHASED 57,2 00 UNITS ISSUED BY THE UNIT TRUST OF INDIA UNDER THE 1964 SCHEME, IN THE FINANCIAL YEAR 1997- 98 AND 2,70,00 SHARES OF CHANDERPAL INVESTMENTS LTD. IN AUGUST, 1999, I.E. DURING THE FINANCIAL YEAR 1999-2000. THE SAID UNITS W ERE SOLD BY THE ASSESSEE COMPANY IN MAY AND AUGUST, 1999 AND THE SAID SHARES WER E SOLD BY IT IN MARCH, 2001, RESULTING IN AN AGGREGATE ASSESSABLE LONG TERM CAPI TAL LOSS OF RS.3,06,814, AFTER TAKING INTO CONSIDERATION THE INDEX ED COST OF ACQUISITION THEREOF. THE ASSESSEE COMPANY WAS TREATING THE AFORESAID PURCHASES AS ITS INVESTMENTS AT ALL MATERIAL TIMES. THE SAID LOSS OF RS.3, 06,814 WAS CLAIMED BY THE ASSESSEE COMPANY AS ASSESSABLE TO TAX UNDER S.45 OF THE A CT. 97. FURTHER, THE ASSESSEE COMPANY SOLD, DURING THE FIN ANCIAL YEAR 2002- 03 CORRESPONDING TO THE FAST YEAR 2003-04, 1,000 SHARES OF SHAMRAO VITHAL COOPERATIVE BANK LTD. ACQUIRED IN FINANCIAL YEAR 1996 -97, 1,000 SHARES OF PRO SPORTS MANAGEMENT LTD. ACQUIRED IN FINANCIAL YEAR 1996 -97, 50,000 SHARES OF ISLAND FINANCE LTD. ACQUIRED IN FINANCIAL YEAR 1996-97 AND 1,00,000 SHARES OF CHANDERPAL INVESTMENTS LTD., ACQUIRED IN FINANCIAL YEAR 1999-2000. TAKING INTO CONSIDERATION THE INDEXED COST OF ACQUISITION IN RE SPECT OF THESE SHARES HELD AS SHORT TERM CAPITAL ASSETS, THE ASSESSEE COMPANY RETURNED A SSESSABLE CAPITAL LOSS LONG TERM IN THE AGGREGATE SUM OF RS.5,30,084 AND SHORT TERM IN THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 68 AGGREGATE SUM OF RS.20,072, AS PER DETAILS SET OUT AT P AGE 2 OF THE PAPER-BOOK VOL.III FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 -04. WHILE THE ASSESSEE COMPANY TREATED THE ABOVE TRANSACTIONS OF PURCHASE O F SHARES AND UNITS AS INVESTMENTS AND ACCORDINGLY COMPUTED THE LONG TER M CAPITAL GAINS, DEDUCTING THE INDEXED COST OF ACQUISITION FROM THE RESPE CTIVE AMOUNT OF SALE CONSIDERATION RECEIVED, WHICH RESULTED FIGURES OF LOSSES ASSESSA BLE UNDER THE HEAD LONG TERM CAPITAL GAIN, THE ASSESSING OFFICER TREATE D THE LOSSES AS SPECULATIVE LOSSES IN VIEW OF THE PROVISIONS CONTAINED IN E XPLANATION APPEARING UNDER S.73 OF THE ACT. 98. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND TOOK US THROUGH THE OBJECTS CLAUSE APPEARING IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY, WHEREIN CLAUSES 3(2) & B(1) PERMIT THE ASSE SSEE COMPANY TO ENGAGE ITSELF IN THE BUSINESS OF PURCHASE AND SALE OF SH ARES OF OTHER COMPANIES. HE ALSO PLACED RELIANCE ON THE FOLLOWING DE CISIONS- (A) CIT V/S. LOKMAT NEWSPAPERS LTD. (32 ITR 43)-BOM (B) CIT V/S. SUN DISTRIBUTORS AND MINING CO. LTD. (1993)68 TAXMAN 223(CAL) (C) ITO V/S. BIG APPLE CLOTHING PVT. LTD. (2010) 5 ITR (TRIB) 44(DEL) (D) CENTURION INVESTMENT AND INTERNATIONAL TRADING CO. PVT. LTD. V/S. ITO(319 ITR (AT) 24(DEL) (E) GUJARAT CREDIT CORPORATION LTD. V/S. ACIT(302 ITR ( AT) 250(AHD) 99. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CO NTENTIONS URGED BEFORE THE LOWER AUTHORITIES, STRONGLY SUPPORTED THE ORDERS OF THE CIT(A). HE SUBTITLED THAT THE PROVISION OF EXPLANATION TO S.73 I S NOT AT ALL APPLICABLE TO THE CASE OF THE ASSESSEE, INASMUCH AS IT IS APPLICABLE ONLY WHEN ANY PART OF THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 69 BUSINESS OF A COMPANY, OTHER THAN THE EXCLUDED CATEGORIES CONSIST IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES. IN OTHER W ORDS, ACCORDING TO HIM, EXPLANATION TO S.73 APPLIES ONLY WHEN THE BUSINE SS OF A COMPANY IS THAT OF DEALING IN SHARES. THE ASSESSEE COMPANY, HE SUBMITTED DOES NOT DEAL IN SHARES AND THE SHARES PURCHASED BY IT WERE ALL ALONG HELD BY IT AS INVESTMENTS AND THIS FACT IS ALSO PROVED FROM ITS PRINTED BALANCE SH EETS WHEREIN THE INVESTMENTS IN SHARES, ETC. WERE ALL ALONG REFLECTED UND ER THE HEAD INVESTMENTS AND NOT UNDER THE HEAD STOCK IN TRADE. HE DREW OUR SPECIFIC ATTENTION TO SCHEDULE 6 OF THE BALANCE SHEETS DRAWN AS ON 31.3.2000; 31.3.2001; 31.3.2003, COPIES OF WHICH ARE FILED IN TH E RELEVANT VOL.II OF THE PAPER BOOKS FOR THE RELEVANT YEARS FILED BEFORE US. HE FURTHER SUBMITTED THAT THE LOSSES ARISING ON SALE OF SHARES AND UNITS CANNOT BE TRE ATED AS SPECULATIVE LOSS WITHIN THE MEANING OF EXPLANATION APPEARING UNDE R S.73 OF THE ACT, SINCE THE SAID EXPLANATION HAS NO APPLICATION IN THE INSTANT CASE. MOREOVER, IT IS SUBMITTED THE UNITS OF UTI NOT BEING SHARES, THE SAID E XPLANATION EVEN OTHERWISE, DOES NOT APPLY IN VIEW OF THE DECISION OF TH E APEX COURT IN APOLLO TYRES LTD. V/S. CIT(255 ITR 273). 100. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMI TTED THAT MERE EXISTENCE OF A POWER IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION HAS NO BEARING ON THE NATURE OF THE TRANSACTIONS OR ON THE Q UESTION WHETHER THE PROFITS/LOSSES ARISING THEREFROM ARE CAPITAL ACCRETION OR ON REVENUE ACCOUNT. IN THIS CONNECTION, HE PLACED RELIANCE ON THE DECISION OF TH E APEX COURT IN KISHAN PRASAD & CO. LTD. V/S. CIT (27 ITR 49). HE FURTHER SUB MITTED THAT NONE OF THE DECISIONS RELIED UPON BY THE LD DEPARTMENTAL REPRESENTA TIVE, HAS ANY APPLICATION TO THE FACTS OF THE PRESENT CASE. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 70 101 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. W E HAVE CAREFULLY GONE THROUGH THE EXPLANATION TO SECTION 73 WHICH READS AS FOL LOWS: [EXPLANATION : WHERE ANY PART OF THE BUSINESS OF A COMP ANY [OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS 'INTEREST ON SECURITIES', 'INCOME FROM HOUSE PROPERTY', 'CAPITAL GAINS' AND 'INCOME FROM OTHER SOURCES'], OR A COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF BANKING OR THE GRANTING OF LOANS AND ADVANCES) CONSISTS I N THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSISTS OF THE PURCHASE AND SALE OF SUCH SHARES.] 102 BECAUSE OF THE ABOVE EXPLANATION TO SECTION 73 W HICH WAS INTRODUCED IN THE ACT W.E.F. 1-4-1977, IT IS OBVIOUS THAT WHEN ANY PART OF THE BUSINESS OF THE COMPANY CONSISTS OF PURCHASE AND SALE O F SHARES OF SUCH COMPANIES, SUCH COMPANIES SHALL FOR THE PURPOSE OF SECTIO N 73 SHALL BE DEEMED TO BE CARRYING ON SPECULATION BUSINESS. THE E XPLANATION HAS ALSO EXCLUDED THE COMPANIES WHOSE GROSS TOTAL INCOME CONSISTS OF MAINLY FROM INTEREST ON SECURITIES, INCOME FROM BUSINESS, CAPITAL GAIN AND INCOME OTHER SOURCES. IN VIEW OF THIS EXPLANATION, IT IS TO BE SHOWN THAT THE ASSESSEES BUSINESS CONSISTS OF PURCHASE AND SALE OF SHARES O F OTHER COMPANIES. THE ASSESSEE COMPANY CLAIMS THAT IT IS NOT DEALIN G IN PURCHASE AND SALE OF SHARES. IT IS ALSO ADMITTED FACT THE A SSESSEE CLASSIFIED THE SHARES AND UNITS OF UTI AS INVESTMENT IN ITS BALANCE SHEET AND IT WAS NOT HELD AS CURRENT ASSETS BY TREATING AS ST OCK IN TRADE. IN OUR OPINION, THE SHARES AND UNITS OF UTI HELD BY THE ASSESSEE AS AN INVESTMENT PORTFOLIO AND THE MERE PROVISIONS IN THE OB JECT CLAUSE OF MEMORANDUM AND ARTICLES OF ASSOCIATION CANNOT BE CONCLUSIV E TO HOLD ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 71 THAT THE ASSESSEE IS CARRYING ON THE BUSINESS IN SHARES AND T O CLASSIFY THE SAME AS STOCK IN TRADE. AS THE ASSESSEE IS NOT CARRYING ON BUSI NESS IN SHARES, IT IS NOT POSSIBLE TO US HOLD THAT EXPLANATION TO SECTION 73 IS APPLICABLE TO ASSESSEE CASE. ACCORDINGLY, WE ARE OPINION THA T THE EXPLANATION TO SECTION 73 CANNOT BE APPLIED TO THE CASE OF ASSESSEE. THE JUDGEMENT RELIED BY LD. DR IN THE CASE OF CIT VS LO KMAT NEWS PAPER LTD. 322 ITR 43 (BOM) CANNOT BE APPLIED TO FACTS OF A SSESSEE CASE. THE ISSUE BEFORE BOMBAY HIGH COURT WAS SETTING OFF OF THE S PECULATION LOSS WITH OTHER INCOME. IT WAS HELD THAT SPECULATION LOSS CANNO T BE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE EITHER WHOLLY OR PA RTLY. FURTHER IT WAS OBSERVED THAT LOSS FROM SPECULATION BUSINESS WHICH HAS NO T BEEN SET OFF EITHER ENTIRELY OR IN PART CAN BE CARRIED FORWARD TO THE SUBSEQUENT ASSESSMENT YEAR AND CAN BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, FROM SPECULATION CARRIED ON BY THE ASSESSEE AND ASSESSABLE F OR THAT YEAR. THE EXPLANATION TO 73 IS ATTRACTED IN A SITUATION WH ERE SOMETHING MORE THAN AN ISOLATED TRANSACTION INVOLVING SALE AND PURCHAS E OF SHARES IS INVOLVED. IT WAS FURTHER OBSERVED THAT UNLESS BUSINESS OF A COMPANY DOES NOT CONSISTS OF PURCHASE AND SALE OF SHARES, THE DEEMING FICTION COULD NOT APPLY. 103 SPECIAL BENCH(AHMEDABAD) OF THIS TRIBUNAL IN T HE CASE OF GUJARAT CREDIT CORPORATION LTD. VS. ACIT (302 ITR ( AT) 250 HAS CONSIDERED SIMILAR ISSUE AND ALSO HAVE EXPRESSED SIMILAR VIE W. IN VIEW OF THIS, THE LOSS HAS TO BE TREATED AS CAPITAL LOSS AND ACCORDI NGLY WE CONFIRM THE ORDER OF CIT(A) AND SAME IS CONFIRMED. GROUNDS OF THE REVENUE ON THIS ISSUE ARE REJECTED. 104 THE NEXT ISSUE ARISING OUT OF THE DEPARTMENTAL A PPEAL, ITA NO.21/HYD/2005 FOR ASSESSMENT YEAR 2001-02 RELATES TO ADD ITION OF ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 72 RS.79,13,246 MADE BY THE ASSESSING OFFICER BY DISALLOWANCE OF BAD DEBT CLAIMED BY THE ASSESSEE, WHICH HAS BEEN DELETED BY THE CI T(A). 105 THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ACCEPT THE LONG TERM CAPI TAL LOSS COMPUTED BY THE ASSESSEE. 106 LEARNED COUNSEL FOR THE ASSESSEE, TAKING US THROUGH THE RELEVANT DETAILS IN RESPECT OF THE DEBTS, WHICH HAD BEEN ACTUALLY WRITTEN OFF BY THE ASSESSEE COMPANY DURING THE FINANCIAL YEAR RELEVANT TO A SSESSMENT YEAR 2001- 02, APPEARING AT PAGES 411 TO 422 OF THE PAPER-BOOK VO. II FILED FOR THE SAID YEAR, SUBMITTED THAT THESE DEBTS REPRESENT UNREALIZED B ILLS RAISED BY THE ASSESSEE BY WAY OF TRANSPORT FREIGHT RECEIVABLES FROM ITS CU STOMERS. IT IS SUBMITTED THAT THE DEBTS IN QUESTION REPRESENT NON-PAY MENTS DUE TO DISPUTES ON ACCOUNT OF RATE DIFFERENCE, AMOUNTS DEDUCTED BY CUSTOME RS DUE TO SHORTAGES, DAMAGES AND LATE DELIVERIES, ETC. AS WELL AS ON ACCOUNT OF INADVERTENT DOUBLE BILLING, BOTH AT BOOKING AS WELL AS DELIVERY STATIONS. IT IS SUBMITTED THAT THE OUTSTANDING DEBTS RELATES TO THE FIN ANCIAL YEARS 1996-97 TO 2000-01 AND MOST OF THE UNREALIZED AMOUNTS ARE INDIVI DUALLY SMALL, AND THE EXPENDITURE ON LITIGATION, WOULD HAVE BEEN WHOLLY D ISPROPORTIONATE TO THE EXPECTED RESULTS. TAKING US THROUGH PAGE 423 TO445 AND 447 OF THE PAPER- BOOK VOL.II FOR THE ASSESSMENT YEAR 2001-02, IT IS SUBMI TTED THAT THE ASSESSEE FOLLOWS A DEFINITE PROCEDURE BEFORE WRITING OFF THE D EBT AS BAD, AND INVITED OUR ATTENTION TO PAGES 423 TO 445 OF THE SAID PAPER-BOOK , WHICH CONTAIN THE CORRESPONDENCE MADE FOR SEEKING LEGAL ADVICE IN RELATION TO THE BAD DEBTS IN QUESTION. HE ALSO DREW OUR ATTENTION TO PAGE 487 OF T HE SAID PAPER-BOOK, WHICH IS SCHEDULE 18 OF AUDITED PROFIT AND LOSS ACCOUNT, T O DEMONSTRATE THAT THE DEBTS IN QUESTION WERE IN FACT WRITTEN OFF IN THE BOOKS OF ACCOUNT. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 73 107 THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISIONS OF THE HONBLE SUPREME COURT IN TRF LTD. VS. CIT(323 ITR 39 7) AND VIJAYA BANK V/S. CIT(323 ITR 166), AND ALSO SUBMITTED THAT AFTER THE A MENDMENT CARRIED OUT IN S.36(1)(VII) READ WITH S.36(2) OF THE ACT BY THE DIR ECT TAX LAWS(AMENDMENT)ACT, 1987 WITH EFFECT FROM 1.4.1989, A WRITE OFF BY AN ASSESSEE IN THE BOOKS IS SUFFICIENT TO CLAIM THE DEDUCTION F OR BAD DEBTS, AND IT IS NO LONGER NECESSARY TO PROVE THAT ANY DEBT HAS ACTUALLY BECOME BAD DURING THE RELEVANT YEAR IN QUESTION. LEARNED COUNSEL THEREFOR E, STRONGLY SUPPORTED THE ORDER OF THE CIT(A) ON THIS ISSUE, AND SUBMITTED THAT T HE SAME MAY BE CONFIRMED. 108 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES. THE CLAIM OF THE BAD DEBTS HA S BEEN DENIED BY AO ON REASON THAT THE ASSESSEE HAS NOT FURNISHED THE REASONS FOR W RITING OFF THE BAD DEBTS. HOWEVER, THERE IS NO DISPUTE REGARDING WRITING O FF THE DEBTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. AFTER THE AMENDMENT OF THE SECTION 36(1)(VII) OF THE INCOME TAX ACT BY DIRECT LAWS (AMENDMENT) ACT, 1987 W.E.F. 1-4-1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO PROVE THAT THE DEBT HA S ACTUALLY BECOME BAD. THE ONLY REQUIREMENT IS TO WRITE OFF OF THE DEB T IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN THIS CASE THE ASSESSEE ACTUALLY WRITTEN OFF OF THE DEBT IN ITS BOOKS OF ACCOUNTS AND CORRESPONDING ENTRY IS ALSO APPEARIN G THE PROFIT & LOSS ACCOUNT PREPARED FOR THE YEAR ENDING ON 31-03-2001. BEING SO, THE CLAIM OF ASSESSEE IS IN ORDER AND IT IS TO ALLOWED. WE FIND NO IN FIRMITY IN THE ORDER OF THE CIT(A) AND SAME IS CONFIRMED. 109. THE NEXT ISSUE ARISING OUT OF THE DEPARTMENTAL APPEAL, ITA NO.21/HYD/2005 FOR ASSESSMENT YEAR 2001-02 RELATES TO THE ADDITION BY THE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 74 ASSESSING OFFICER BY COMPUTING THE LONG TERM CAPITAL GAINS ON SALE OF THREE IMMOVABLE PROPERTIES, SOLD BY THE ASSESSEE DURING THE FI NANCIAL YEAR ENDING WITH 31.3.2001 AT RS.3,43,58,163 AS AGAINST ASSESSABLE LO SS OF RS.18,21,092 COMPUTED BY THE ASSESSEE. 110. THE LEARNED DEPARTMENTAL REPRESENTATIVE ST RONGLY SUPPORTING THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ACCEPT THE LONG TERM CAPI TAL LOSS COMPUTED BY THE ASSESSEE. 111 THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, TAKING US THROUGH THE DETAILS OF IMMOVABLE PROPERTIES, WHICH WE RE SOLD BY THE ASSESSEE COMPANY DURING THE FINANCIAL YEAR ENDING ON 31.3.200 1, RELEVANT FOR ASSESSMENT YEAR 2001-02, WHICH RESULTED IN LONG TERM CAPIT AL GAINS TO THE EXTENT OF RS.18,21,092, WHICH ARE FILED AT PAGE 516 O F VOL.III OF THE PAPER-BOOK FOR THE ASSESSMENT YEAR 2001-02, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EACH OF THESE PROPERTIES HAD VESTED IN THE ASSESSEE-COM PANY IN TERMS OF THE SCHEME OF ARRANGEMENT APPROVED BY THE HONBLE HIGH COURT OF ANDHRA PRADESH DATED 13 TH JULY, 1998, COPY OF WHICH ALONGWITH RELEVANT DOCUMENT S IS FILED AT PAGES 517 TO 562 OF THE SAID PAPER-BOOK. IT IS SUBMITTED THAT COST OF ACQUISITION IN THE HANDS OF THE ASSESSEE-COMPANY IN RESPECT OF EACH OF THE SAID IMMOVABLE PROPERTIES WAS TAKEN AT THE RESPECTIVE FIGURE S APPEARING IN THE AUDITED BOOKS OF ACCOUNT OF THE TRANSFEROR COMPANY, IN T ERMS OF THE SCHEME SANCTIONED BY THE HON'BLE HIGH COURT. HOWEVER, IT IS SU BMITTED THAT THE ASSESSING OFFICER BY THE IMPUGNED ASSESSMENT ORDER DATED 3 1.3.2004 PASSED FOR THE ASSESSMENT YEAR 2001-02, TOOK THE COST OF ACQUISIT ION OF THESE PROPERTIES AT NIL, ON THE GROUND THAT THE ASSESSEE COMPA NY DID NOT PAY ANY CONSIDERATION FOR ACQUISITION OF THE SAID PROPERTIES, WH ICH VESTED IN IT IN ACCORDANCE WITH THE SCHEME OF HIVE OFF OF THE DIVISION A ND REDUCTION OF SHARE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 75 CAPITAL OF THE PARENT COMPANY, AS WAS APPROVED BY THE HONBLE HIGH COURT. IT IS SUBMITTED THAT THE ASSESSING OFFICER IN THAT MANNER HA S ARBITRARILY TAKEN THE LONG TERM CAPITAL GAINS IN THE SUM OF RS.3,43,58,163L, AS AGAINST THE ASSESSABLE LOSS OF RS.18,21,092 COMPUTED BY THE ASSESSEE AFTER TAKING INTO ACCOUNT THE INDEXED COST OF ACQUISITION IN TERMS OF SECOND PROVISO TO S.48 OF THE ACT AS PER THE DETAILS FURNISHED AT PAGE 516 OF PAP ER BOOK VOL.III FILED FOR THE ASSESSMENT YEAR 2001-02. IN THE CIRCUMSTANCES, IT IS SU BMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE APPROACH ADOPTED BY THE ASSESSING OFFICER IN IGNORING THE COST OF ACQUISITION IS NOT CORRECT AND THE CIT(A) WAS JUSTIFIED IN DIRECT THE ASSESSING OFFICER TO ACCEPT THE LO NG TERM CAPITAL LOSS COMPUTED BY THE ASSESSEE. 112 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. IN THIS CASE ALL THE THREE PROPERTIES GOT VESTED WITH THE ASSESSEE DUE TO SCHEME OF ARRANGEMENT APPROVED BY HIGH COURT. THE ASSETS OF TRANSPO RT DIVISION WAS TRANSFERRED TO THE ASSESSEE COMPANY AT BOOK VALUE. T HOUGH SHARES WERE ALLOTTED TO THE SHAREHOLDERS OF THE PARENT COMPAN Y, WE HAVE TO SEE WHAT WAS THE COST OF ACQUISITION OF THE PROPERTY SOLD BY THE ASSESSEE. THE BOOK VALUE AS ON 1-4-1996 COULD BE CONSIDERED AS COST OF A CQUISITION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. AS PER PROVISIONS OF SECTION 49 OF THE INCOME TAX ACT, THERE IS NO SPECIAL PROVISION FOR COM PUTATION OF COST IN RESPECT OF PROPERTY VEST WITH THE COMPANY BY WAY OF SCHEME OF ARRANGEMENT APPROVED BY THE COMPETENT COURT OF LAW. T HE ASSESSEE GOT THE PROPERTY AS SUCCESSOR BY A SCHEME APPROVED BY HIGH CO URT. THEREFORE, THE VALUE AS APPEARED IN THE AUDITED BOOK S OF THE TRANSFEROR COMPANY WOULD BE THE COST OF ACQUISITION FOR THE ASSESSEE COMPANY. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF CIT(A) IN TAKING THE COST OF VALUE AT THE RESPECTIVE FIGURE APPEARING IN THE AUDITED BOOKS ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 76 OF ACCOUNT OF THE TRANSFEROR IN PURSUANCE TO THE SCHEME SA NCTIONED BY THE HIGH COURT. GROUNDS OF THE REVENUE ON THIS ISSUE ARE REJECTED. 113. THE NEXT ISSUE ARISING FOR CONSIDERATION IN THE APPEAL OF THE ASSESSEE BEING ITA NO.789/HYD/2009 FOR THE ASSESSMENT YEAR 2 001-02, RELATES TO VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS, INITIATED BY THE ASSESSING OFFICER BY ISSUANCE OF NOTICE UNDER S.147/148 DATED 25.,2.200 8. 114. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE COMP ANY WAS ORIGINALLY ASSESSED IN RESPECT OF THE ASSESSMENT YEAR 2001-0 2, VIDE ORDER OF ASSESSMENT DATED 31.3.2004 PASSED UNDER S.143(3) OF TH E ACT. WHILE FRAMING THE SAID ORIGINAL ASSESSMENT, THE ASSESSING OFFICER FOR THE DETAILED REASONS SET OUT BY HIM, DISALLOWED AN AMOUNT O F RS.77,29,201, REPRESENTING 15% OF THE AGGREGATE COMMISSION PAYMENTS A MOUNTING RS.5,15,28,011. THE SAID ASSESSMENT ORDER DATED 31.3.2 004 WAS SUBJECT MATTER OF APPEAL BEFORE THE CIT(A), WHO VIDE HIS ORDER DATED 14.10.,2004, REDUCED THE DISALLOWANCE MADE BY TEH ASSESSIN G OFFICER TO 5% OF THE AGGREGATE COMMISSION PAYMENTS. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE AS WELL AS REVENUE HAVE FILED APPEA LS BEFORE THE TRIBUNAL, BEING ITA NO.1214/HYD/2004 OF THE ASSESSEE AN D ITA NO.21/HYD/2005 OF THE DEPARTMENT. DURING THE PENDENCY OF THE SAID TWO APPEALS BEFORE THE TRIBUNAL, THE ASSESSING OFFICER ISSUE D NOTICE DATED 25.2.2008 UNDER S.148/147 OF THE ACT PURPORTING TO R EOPEN THE COMPLETED ASSESSMENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 200 1-02. THE REASONS RECORDED BY THE ASSESSING OFFICER UNDER S.148 (2) OF THE ACT BEFORE INITIATING THE RE-ASSESSMENT PROCEEDINGS, AS SET OUT IN HIS LETTER DATED 10 TH DECEMBER, 2008, READ AS UNDER- FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSMENT WAS ORIGINALLY FINALIZED UNDER SECTION 143(3) OF THE INCOM E-TAX ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 77 ACT, 1961, ON 31.03.2004. THE TOTAL INCOME WAS COMPUTE D AT RS.8,42,30,230 AFTER MAKING A DISALLOWANCE OF 15% OF T HE COMMISSION CLAIMED BY THE COMPANY. ON AN APPEAL FILED BY THE COMPANY, THE CIT(A) REDUCED THE SAME TO 5% IN HIS ORDER DATED 14.10.2004. THE DISALLOWANCE OF 15% TO 5% OF THE COMMISSION IS AGAIN ST THE DISALLOWANCE OF 100% OF COMMISSION UPHELD BY THE HONBLE ANDHRA PRADESH HIGH COURT IN THE COMPANYS OWN CASE FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85 (REPORTED IN (2002)256 ITR 701(AP) IN VIEW OF THE FACT THAT THERE BEING NO MATERIAL CHAN GE IN RESPECT OF FACTS AVAILABLE FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85 AND FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.4,81,51,611 HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02, WITHIN THE MEANING OF CLAUSE (C) OF EXPLANATION 2 OF SECTION 14 7 OF THE INCOME-TAX ACT, 1961. 115. THE CIT(A), ON APPEAL OF THE ASSESSEE QUESTIONING THE LEGALITY AND VALIDITY OF THE REOPENING OF THE ASSESSMENT, REJECTE D THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ACTION OF THE ASSESSING OFFICE R IN THIS REGARD. HENCE, ASSESSEE IS IN SECOND APPEAL FOR THE ASSESSMENT Y EAR 2001-02 ON THIS ASPECT AS WELL. 116. IT IS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT A BARE PERUSAL OF THE REASONS PUT FORTH BY THE ASSE SSING OFFICER FOR RE-OPENING THE ASSESSMENT, WOULD REVEAL THAT HIS ACTION I S BASED ON MERE CHANGE OF OPINION BASED ON THE READING OF THE JUDGMEN T OF THE HONBBLE HIGH COURT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1981 -82 TO 1984-85 CITED SUPRA. IT IS AN ADMITTED FACT, AS EVIDEN T FROM THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AS WELL, TH AT THE ASSESSING OFFICER WAS FULLY CONSCIOUS OF THE DECISION OF THE HONBLE HI GH COURT IN ASSESSEES OWN CASE FOR THE EARLIER YEARS, AND THAT THE DI SALLOWANCE OF 15% OF THE AGGREGATE COMMISSION PAID BY THE ASSESSEE COMPA NY, WAS ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 78 MADE BY THE ASSESSING OFFICER, AFTER CONSIDERING ALL FACT S AND CIRCUMSTANCES OF THE CASE, INCLUDING THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT NOTED ABOVE. FURTHER, IT IS PLEADED THAT THE CIT(A) HAD ALSO DULY CONSIDERED THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE APPELLATE PROCEEDINGS A RISING OUT OF THE ORIGINAL ASSESSMENT PROCEEDINGS, AND AFTER CONSIDERING THE RELEVANT FACTS AND MATERIAL ON RECORD AS WELL AS THE SAID DECISION OF T HE HONBLE HIGH COURT REDUCED THE DISALLOWANCE OUT OF COMMISSION PAYMENT S FROM 15% MADE BY THE ASSESSING OFFICER TO 5%. HE POINTED OUT THA T THE ASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER FOR TEH ASSESSMENT YEAR 2001-02, BY ISSUANCE OF NOTICE DATED 25 TH FEBRUARY, 2008 UNDER S.148/147 OF THE ACT, WAS AFTER THE EXPI RY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2001-02. OUR SPECIFIC ATTENTION AT THIS JUNCTURE IS INVITED TO PROVISO TO S.147 OF THE ACT, WHICH LAYS DOWN THAT WHERE AN ASSESSMENT UNDER S.143(3) HAS BEEN MADE IN THE CASE OF ANY ASSESSEE FOR ANY ASSESSMENT YEAR, NO ACTION SHALL BE TAKE N UNDER S.147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SECTION 142(1) OR SECTION 148 OF THE SA ID ACT, OR ON THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY LAND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMEN T YEAR. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS SETTL ED POSITION OF LAW THAT THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR, ENVISAGED IN THE AFORESAID PROVISO SHOULD BE PRIMARY FACTS, AND CONSEQUEN TLY, IT IS AN UNDISPUTED FACT THAT THE CONDITIONS SET OUT IN PROVISO TO S.147 OF THE ACT ARE NOT SATISFIED IN THE INSTANT CASE OF THE ASSESSEE, SINCE THE ASSESSEE ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 79 COMPANY HAD FIELD ITS RETURN OF TOTAL INCOME FOR THE ASSESSMENT YEAR 2001-02 VOLUNTARILY UNDER S.139 OF THE ACT ON 31.10. 2001, AND THE COMPANY HAD ALSO DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS IN THE COURSE OF ORIGINAL REGULAR ASSESSMENT PROCEEDINGS FOR THE SAID YE AR, WHICH HAD BEEN DULY COMPLETED BY THE ASSESSING OFFICER UNDER S.143 (3) OF THE ACT, VIDE ORIGINAL ASSESSMENT ORDER DATED 31.3.2004. 117. IT IS FURTHER SUBMITTED BY THE LEARNED COUNSEL T HAT BOTH THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) HAD APPLI ED THEIR MINDS WITH REFERENCE TO THE FACTS AND EVIDENCE ON RECORD AND A FTER CONSIDERING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1981-82 TO 1984-85, HAD DISA LLOWED A PORTION OF SUCH COMMISSION, VIS. 15% BY THE ASSESSING OFFICER AND 5% BY THE CIT(A), WHICH SHOWS THAT THE ISSUE WHETHER THE PAY MENT OF COMMISSION BY THE ASSESSEE COMPANY WAS DEDUCTIBLE AS A BUSINESS EXPENDITURE, WHOLLY OR PARTLY, WAS DULY CONSIDERED AND DELIBERATED UPON BOTH BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A) IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2001- 02. 118. IN VIEW OF THE ABOVE, IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IT IS BEYOND ALL REASONABLE DOUBT T HAT THE ATTEMPT BY THE ASSESSING OFFICER TO INITIATE THE IMPUGNED RE-A SSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2001-02 ON THE VERY SA ME ISSUE OF COMMISSION IS NOTHING BUT A CLEAR CASE OF CHANGE OF OPINIO N, WHICH IS NOT PERMISSIBLE IN LAW. IN SUPPORT OF THIS PROPOSITION, HE PLACED RELIANCE ON THE FOLLOWING CASE-LAW- (A) CIT V/S. KELVINATOR OF INDIA LTD. (320 ITR 561)-SC (B) GEMINI LEATHER STORES V/S. ITO (100 ITR 1)-SC ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 80 (C) CIT V/S. RAO THAKUR NARAYAN SINGH (56 ITR 234)- SC (D) JINDAL PHOTO FILMS LTD. VS/ DCIT (234 ITR 170)-DEL. (E) CIT V/S. RAMCHANDRA HATCHERIES (305 ITR 117)-MAD. (F) PURITY TECHTEXTILE PVT. LTD. V/S. ACIT(325 ITR 4 59)-BOM. (G) PRADEEP TRUST V/S. CIT(325 ITR 1)-CAL. (H) ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. V/S. ACIT(325 ITR 471)- BOM (I) ARTHUR ANDERSON & CO. V/S. ACIT(324 ITR 240) (J) D.T. & T.D.C. LTD. V/S. ACIT (324 ITR 234)=DEL. (K) CIT V/S. GOETZE INDIA LTD. (321 ITR 431)-DEL. (L) CIT V/S. K.K. PALANISAMY (321 ITR 474)-MAD. (M) INDUCTOR ISPAT ALOYS LTD. V/S. AIT( 320 ITR 458)-GUJ (N) CIT V/S. EMPIRE INDUSTRIES LTD. (210 ITR 267)-BOM. (O) MANOO LAL KEDARNATH V/S. UNION OF INDIA (114 ITR 88 4)-ALL. 119. IT MAY BE NOTED AT THIS JUNCTURE, THAT THE LE ARNED COUNSEL FOR THE ASSESSEE HAS DISCUSSED THE RATIO LAID DOWN IN THE ABOVE DECISIONS IN THE WRITTEN SUBMISSIONS FILED BY HIM, AND ALSO FURNISHED COPIES OF THE SAME IN THE RELEVANT PAPER-BOOK FOR THE ASSESSMENT YEAR 2001-02. 120. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON T HE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIE S. HE SUBMITTED THAT THE REOPENING OF ASSESSMENT WAS NOT PROMPTED BY M ERE CHANGE OF OPINION AS ALLEGED BY THE ASSESSEE. HE SUBMITTED THAT THE ASSESSING OFFICER SHOULD HAVE TAKEN ONE OF THE LAWFULLY PERMISS IBLE VIEWS TO ENABLE AN INFERENCE OF CHANGE OF OPINION IN THE CONTEXT OF S. 147. HOWEVER, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS FAILED TO FOLLOW THE LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT OF THE ASSESSMENT YE ARS 1981-82 TO 1984-85, ON FACTS IDENTICAL IN THOSE YEARS, AS NOTICED BY THE TRIBUNAL, AND CONSEQUENTLY, THE ASSESSING OFFICER IS NOT PERMITTED TO EN TERTAIN ANY ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 81 OPINION CONTRARY TO THE POSITION LAID DOWN BY THE J URISDICTIONAL HIGH COURT. DISTINGUISHING THE CASE-LAW RELIED UPON BY TH E LEARNED COUNSEL FOR THE ASSESSEE, HE PLACED RELIANCE ON THE FOLLOWING DECISION S- (A) INCOME TAX OFFICER V/S. SARADBHAI LAKHANI (243 ITR 1)- SC (B) MADRAS RAE CLUB CHARITABLE TRUST V/S CIT(245 ITR 2 40)-MAD. (C) CIT V/S. RAGHUNATH PODDAR (96 ITR 316)-CAL. (D) SOMDATT BUILDER PVT. LTD. V/S. DCIT (98 ITD 78) -CAL. TRIB. HE FURTHER SUBMITTED THAT WHILE SIMPLE AND NON-ARGUME NTATIVE MISTAKES IN THE ORDER OF ASSESSMENT ARE AMENABLE TO RECTIFICATION IN TERMS OF PROVISIONS OF S.154, OTHERS HAVE TO BE SET RIGHT BY MA KING RECOURSE TO THE PROVISIONS RELATING TO REASSESSMENT UNDER S.147 OR REVISI ON UNDER S.263 OF THE ACT. IN THE PRESENT CASE, HE SUBMITTED NOT FOLLO WING THE DECISION OF JURISDICTIONAL HIGH COURT IS A MISTAKE APPARENT FROM RECORD, AS HELD BY THE SUPREME COURT THE CASE OF SAURASHTRA KUTCH STOCK EXCH ANGE LTD. (305 ITR 227); AND THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RAMAL BABULAL (334 ITR 776), WHICH CAN BE RECTIFIED ONLY REOPENING THE ASSESSMENT UNDER S.147 OF THE ACT. 121. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE GONE THROUGH THE WRITTEN SUBMISSIONS OF BOTH THE PARTIES AND OTHER M ATERIAL ON RECORD AND ALSO THE CASE-LAW CITED BY THE PARTIES. IN THIS CASE TH E ASSESSMENT ORDER WAS PASSED ON 31-03-2004 WHEREIN THE ASSESSING OFFICE R DISALLOWED 15% OF COMMISSION PAYMENT. IT IS NEEDLESS TO SAY THAT AT T HE TIME OF PASSING THE ASSESSMENT ORDER, THE JUDGMENT OF JURISDICTION AL HIGH COURT IN ASSESSEE OWN CASE FOR THE ASSESSMENT YEAR 1981-82 TO 1984 -85 WAS VERY MUCH AVAILABLE WHICH WAS PRONOUNCED ON 06-06-200 2. THE ASSESSING OFFICER DULY CONSIDERED THE JURISDICTIONAL HIGH CO URT JUDGMENT IN ASSESSEE OWN CASE AND DISALLOWED 15% OF COMMISSION PAYMENT. IN VIEW ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 82 OF THIS, THE ASSESSING OFFICER CANNOT REOPEN THE CONCLUDED A SSESSMENT ONLY ON THE BASIS OF VERY SAME JUDGMENT WHICH WAS VERY MUCH AVAILABLE FOR HIS CONSIDERATION AND ALSO THE ASSESSMENT ORDER WAS PASSE D AFTER DULY CONSIDERING THE SAME. FURTHER, THE CIT(A) PARTLY CONFI RMED THE DISALLOWANCE BY MODIFYING THE ORDER OF THE AO AND DISA LLOWED COMMISSION TO THE EXTENT OF 5% INSTEAD OF 15% DISALLOWED BY ASSESSI NG OFFICER. THEREFORE, THE ORDER OF ASSESSING OFFICER IS MERGED WITH THE ORDER OF CIT(A). ONCE THE ORDER OF THE ASSESSING OFFICER IS MERGED WITH ORDER OF CIT(A), THE ASSESSING OFFICER CANNOT EXERCISE HIS POWER U/S 1 47 OF THE INCOME TAX ACT TO REOPEN THE ISSUE WAS DECIDED BY HIGHER FORUM IN THE GUISE OF INCOME ASSESSABLE TO TAX HAS ESCAPED FROM ASSESSMENT. THERE IS NO FURTHER QUESTION OF ANY ESCAPEMENT OF INCOME FROM AS SESSMENT WHEN THE CIT(A) CONSIDERED THE VERY SAME ISSUE OF PAYMENT OF COMMISSION IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE HIM UNDER SECT ION 250 OF THE ACT. THE ASSESSING OFFICER COULD EXERCISE THE POWER OF REOPE NING OF ASSESSMENT ON ANY ISSUE IF IT IS NOT SUBJECT MATTER OF APPEA L BEFORE CIT (A) AND IT IS BEFORE THE CIT(A) FOR HIS CONSIDERATION OR IF HE HAS CONSIDERED THE SAME ISSUE, IN THAT CIRCUMSTANCES, THE AO IS P RECLUDED FROM CONSIDERING SAME FOR REOPENING OF ASSESSMENT IN GUISE OF BRINGING INTO TAX THE ESCAPED INCOME. THE ONLY REMEDY AVAILABLE TO ASSESSING OFFICER IS TO PREFER APPEAL BEFORE HIGHER FORUM AND N OT TO REOPEN THE SAME ASSESSMENT. IN VIEW OF THIS, WITHOUT GOING INTO MERIT OF THE ISSUE, WE CANCEL THE ORDER OF THE LOWER AUTHORITIES AND THE GROU ND TAKEN BY THE ASSESSEE ON REOPENING IS ALLOWED. 122. THE NEXT ISSUE ARISING FOR CONSIDERATION IN THE APPEAL OF THE ASSESSEE BEING ITA NO.431/HYD/2007 FOR THE ASSESSMENT YEAR 2003-04, RELATES TO ADDITION OF RS.25,02,677 MADE BY THE ASSESSING OFFICER , BY WAY OF LONG TERM CAPITAL GAINS BY APPLYING THE PROVISIONS OF S.50C OF TH E ACT. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 83 123. FACTS IN BRIEF RELATING TO THIS ISSUE ARE THAT THE ASSESSEE COMPANY DURING THE FINANCIAL YEAR ENDING 31.3.2003 RELEVANT FOR ASSESSMENT YEAR 2003- 04, SOLD AN IMMOVABLE PROPERTY BEING LAND AND BUILDI NG SITUATED AT NAINI, ALLAHABAD FOR AN AGGREGATE CONSIDERATION OF RS.11,40,0 00 ALLOCATED BETWEEN LAND OF RS.5,54,323 AND BUILDING OF RS.5,85,677. WHI LE FILING THE RETURN OF INCOME, THE ASSESSEE COMPANY DECLARED LONG TERM CAPITAL LO SS OF RS.10,97,994 ATTRIBUTABLE TO SALE OF LAND, TAKING THE INDEXED COST OF ACQUISITION IN TERMS OF PROVISO TO S.48 OF THE ACT. THE ASSESSING OFFICER HOWEVER , WHILE FRAMING THE ASSESSMENT ORDER DATED 27.3.2006, OBSERVED THAT COPY OF THE SALE DEED SHOWS THE STAMP DUTY VALUE OF THE LAND HAVING BEEN ADOPTED FOR REGISTRATION PURPOSES AT RS.30,57,000, AS AGAINST THE ACTUAL CONSIDERATION OF RS.5,54,323 RECEIVED AND RECORDED BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNT. THE ASSESSING OFFICER, THEREFORE, INVOKING THE PROVISIONS OF S.50C O F THE ACT BROUGHT TO TAX THE SUM OF RS.25,02,677, BEING THE DIFFERENCE BETWEEN THE RECORDED CONSIDERATION OF RS.5,54,323 AND THE VALUE ADOPTED FOR STAMP DUTY P URPOSES IN THE SUM OF RS.30,57,000 BY WAY OF DEEMED CAPITAL GAINS ON THE SALE OF THE SAID LAND. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. HENCE, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 124. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT RECEIVED ANY CONSIDERATION OVER AND ABOVE THE AMO UNT OF RS.5,54,323 DISCLOSED IN THE REGISTERED INSTRUMENT OF SALE, AND THERE FORE, THERE IS NO JUSTIFICATION FOR THE ADDITION MADE BY THE ASSESSING OFFI CER, WHICH IS LIABLE TO BE DELETED. HE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN CIT V/S. CHANDNI BUCHAR (323 ITR 510) IN SUPPORT OF HIS CONTENTIONS IN THIS BEHALF. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 84 125. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ACCEPT THE LONG TERM CAPI TAL LSOS COMPUTED BY THE ASSESSEE 126. WE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. THE LD. AR CONTENDED THAT IT HAS ACTUALLY RECEIVED ONLY CONSIDERATION OF RS. 5,53,3 23/- AS AGAINST THE REGISTRATION VALUE OF RS. 30,57,000/- AND RELIED ON THE JUDGEMENT OF PUNJAB OF HARYANA HIGH COURT IN THE CASE OF CIT VS. CHANDNI BOU CHER ( 323 ITR 510) WHEREIN HELD THAT IN THE ABSENCE OF ANY EVIDENCE, VALU ATION DONE BY STAMP DUTY AUTHORITIES COULD NOT BE TAKEN AS ACTUAL SALES CONSID ERATION AND THE VALUE SHOWN IN THE SALE DEED HAD TO BE ACCEPTED. 127. WE HAVE GONE THROUGH THE ABOVE JUDGMENT. I N THAT CASE BEFORE PUNJAB & HARYANA HIGH COURT THE ASSESSEE CATEGORICAL LY PROVED THAT THE CONSIDERATION PASSED IS THE CONSIDERATION SHOWN IN THE SALE DEED. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE NOT DISCHARG ED THE BURDEN CAST ON IT. THE ASSESSEE HAVING NOT AVAILED OF T HE OPPORTUNITY PROVIDED UNDER SUB-SECTIONS (2) AND (3) OF S 50C TO OBJ ECT TO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITIES, IN OUR OPINION, THE AO JUSTIFIED IN TREATING THE VALUE ADOPTED BY THE SAID A UTHORITIES AS THE DEEMED SALE CONSIDERATION RECEIVED/ ACCRUING AS A RESULT O F TRANSFER. THIS GROUND OF THE ASSESSEE IS DISMISSED. 128. THE NEXT ISSUE ARISING FOR CONSIDERATION IN THE APPEAL OF THE ASSESSEE BEING ITA NO.431/HYD/2007 FOR THE ASSESSMENT YEAR 2 003-04, RELATES TO DENIAL OF RELIEF UNDER S.80M OF THE ACT. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 85 129. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY HAD EAR NED BY WAY OF DIVIDENDS IN THE SUM OF RS.4,500 FROM A DOMESTIC COMPANY , VIZ. SHAMRAO VITHAL CO-OPERATIVE BANK LTD., MUMBAI. THE ASSESSEE CLA IMED RELIEF UNDER S.80M OF THE ACT IN RESPECT OF THIS RECEIPT, WHICH HAS BEE N REJECTED BY THE ASSESSING OFFICER. THE SAID DISALLOWANCE MADE BY THE ASSESSIN G OFFICER HAS BEEN CONFIRMED BY THE CIT(A). HENCE, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 130. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE COMPANY HAD DISTRIBUTED DIVIDENDS TO ITS SHAREHOLDERS IN ITS ANNUAL GENERAL MEETING HELD ON 29 TH AUGUST, 2003 IN THE AGGREGATE SUM OF RS.189 LAKHS, WH ICH AMOUNT IS FAR IN EXCESS OF THE DIVIDENDS RECEIVED, AND CON SEQUENTLY, IN VIEW OF THE SPECIFIC PROVISIONS CONTAINED IN S.80M OF THE ACT, TH E ASSESSING OFFICER SHOULD HAVE GRANTED DEDUCTION IN THE SUM OF RS.4,500 ON THIS ACCOUNT. 131. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON TH E OTHER HAND, SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 132. WE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. THE PROVISIONS OF SECTION 80M READS AS FOLLOWS: '80M. DEDUCTION IN RESPECT OF CERTAIN INTER-CORPORATE DIVIDENDS. (1) WHERE THE GROSS TOTAL INCOME OF A DOMESTIC COMPANY, IN ANY PREVIOUS YEAR, INCLUDES ANY INCOME BY WAY OF DIVIDENDS FROM ANOTHER DOMESTIC COMPANY, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF SUCH DOMESTIC COMPANY, A DEDUCTION OF AN AMOUNT EQUAL TO SO MUCH OF THE AMOUNT OF INCOME BY WAY OF DIVIDENDS FROM ANOTHER DOMESTIC COMPANY AS DOES NOT EXCEED THE AMOUNT OF DIVIDEND DISTRIBUTED BY THE FIR ST- ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 86 MENTIONED DOMESTIC COMPANY ON OR BEFORE THE DUE DATE. (2) WHERE ANY DEDUCTION, IN RESPECT OF THE AMOUNT OF DIVIDEND DISTRIBUTED BY THE DOMESTIC COMPANY, HAS BEEN ALLOWED UNDER SUB-SECTION (1) IN ANY PREVIOUS YEAR, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH AMOUNT IN ANY OTHER PREVIOUS YEAR. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'DUE DATE' MEANS THE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139.' 133. THIS SECTION WAS DELETED BY FINANCE ACT, 2003 W. E.F. 01-04- 2004. IN THIS CASE, SINCE THE DIVIDEND RECEIVED BY THE ASSE SSEE DOES NOT EXCEED THE AMOUNT OF DIVIDEND DISTRIBUTED ON OR BEFOR E DUE DATE, THE SAID DIVIDEND RECEIVED SHALL BE ALLOWED AS DEDUCTION U/S 80M OF THE ACT. THE ASSESSEE HAS RECEIVED ONLY RS. 4,500 AND IT HAS DISTRIBUTED RS. 1,89,00,000 BY WAY OF DIVIDEND. HENCE, WE DO NOT FIN D ANY JUSTIFICATION FOR DISALLOWING THE CLAIM OF THE ASSESSEE. AS SUCH, THE OR DERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE CLAIM OF THE ASSESSEE IS A LLOWED. 134. IN ITA NO.21/HYD/2005, THE REVENUE RAISED ADDIT IONAL GROUND CONTESTING THAT THE CIT(A) HAS ERRED IN ADMITTING ADDI TIONAL EVIDENCE IN VIOLATION OF RULE 46A. ACCORDING TO THE REVENUE, THE CIT(A) OUGHT TO HAVE FOLLOWED THE JUDGMENT OF THE ALLAHABAD HIGH CO URT IN THE CASE OF H.LAL.MOHD. B. WORKS V/S. CIT IN REFERENCE NO.96 OF 19 87(2005) RD AH- 219(DATE 20.1.2005), WHEREIN HIGH COURT HELD THAT TH E TRIBUNAL HAS RIGHTLY SET ASIDE THE ASSESSMENT AND DISMISSED THE ORDER OF THE CIT(A) FOR ACCEPTING THE ADDITIONAL EVIDENCE UNDER RULE 46A OF IN COME-TAX RULES. MORE SO, THE GRIEVANCE OF THE REVENUE IS THAT THE ASSESSIN G OFFICER HAS NOT GOT AN OPPORTUNITY TO VERIFY THE CLAIM OF THE ASSE SSEE. ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 87 135. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IN OUR OPINION, THE GRIEVANCE OF THE REVENUE HEREIN IS WITH REGARD TO CONSIDERATION BY THE CIT(A), THE 76 AFFIDAVITS FROM BRANCH MANAGERS, FI LED BY THE ASSESSEE, IN RESPECT OF ITS CONTENTION THAT COMMISSION PAYMEN TS WERE MADE AT THE RESPECTIVE BRANCHES. THE CIT(A), CONSIDERIN G THESE AFFIDAVITS SUSTAINED DISALLOWANCE OUT OF COMMISSION PAYMEN TS TO THE EXTENT OF 5%. IN VIEW OF OUR DECISION ON THE DISALLOWA NCE OUT OF COMMISSION PAYMENTS, ON MERITS, WHEREBY WE SUSTAINED DISAL LOWANCE WORKED OUT AT 15%, WE FIND NO MERIT IN THIS ADDITION AL GROUND OF THE REVENUE. THE SAME IS ACCORDINGLY REJECTED. 136. IN THE RESULT, THESE APPEALS ARE DISPOSED OF AS FOLLOWS- ITA NO. ASSESSMENT YEAR APPEAL BY RESULT 1214/HYD/2004 2001-02 ASSESSEE DISMISSED 295/HYD/2006 2002-03 ASSESSEE PARTLY ALLOWED 430/HYD/2007 2000-01 ASSESSEE PARTLY ALLOWED 431/HYD/2007 2003-04 ASSESSEE PARTLY ALLOWED 1125/HYD/2007 2004-05 ASSESSEE PARTLY ALLOWED 19/HYD/2009 2005-06 ASSESSEE PARTLY ALLOWED 789/HYD/2009 2001-02 ASSESSEE ALLOWED 21/HYD/2005 2001-02 DEPARTMENT PARTLY ALLOWED 794/HYD/2007 2000-01 DEPARTMENT DISMISSED 795/HYD/2007 2003-04 DEPARTMENT DISMISSED ORDER PRONOUNCED IN THE COURT ON 25 TH JANUARY, 2012 SD/- SD/- (CHANDRA POOJARI) (H.S.SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 25 TH JANUARY, 2012 ITA NO.1214/HYD/04 AND NINE OTHERS M/S. TRANSPORT CORPORATION OF INDIA LTD., SECBAD 88 COPY FORWARDED TO: 1. M/S. TRANSPORT CORPORATION OF INDIA LTD., 306 & 307 III FLOOR, ASHOKA BHOPAL CHAMBERS, S.P. ROAD, SECUNDE RABAD. 2. ASST. COMMISSIONER OF INCOME-TAX CIRCLE 3(3), HYDERABA D. 3. COMMISSIONER OF INCOME-TAX(APPEALS)-IV, HYDERABAD. 4. COMMISSIONER OF INCOME-TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S./TPR