Rajesh Balia, J.
1. Heard learned counsel for the appellant.
2. The appellant challenges the order passed by the Income-tax Appellate Tribunal, Jodhpur, and contends that a substantial question of law arises for consideration of this court in this case.
3. The facts leading to this appeal are that substantial additions were made by the Assessing Officer under Section 40A(2) of the Income-tax Act, 1961 (for short 'the Act of 1961'), by holding that the assessee has paid excessive purchase price to the sellers on purchases made by it from its sister concerns or group of concerns than on the purchases made by the assessee from the primary producers, i.e., Hindustan Aluminium Co. Ltd., etc., where the assessee-directors were not having substantial interest. The total excess payment over the fair market value was estimated to be Rs. 7,54,584 on account of the purchases made by the assessee from Salbo Conductors Pvt. Ltd., Salbo Engineering Pvt. Ltd. and Bali Cables Pvt. Ltd. The additions made on that ground were challenged before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) had accepted the explanation furnished by the assessee that the primary producers of raw materials were Hindustan Aluminium Corporation Ltd. and Bharat Aluminium Co. Ltd. The production of E.C. grade aluminium in the year 1987-89 was not satisfactory and there were a lot of contracts of cable conductors industry which have gone into arrears because of the late supply of E, C. grade aluminium. If the appellant had not supplied the conductors by obtaining the raw materials from the open market, it would have suffered by way of penal consequences, etc., from the Electricity Board and it was to fulfil the contractual agreement, the appellant had purchased the raw materials from the open market which it was otherwise obtaining from Hindustan Aluminium Co. Ltd. and Bharat Aluminium Co. Ltd. In view of this there was no justification at all in comparing the sale price of the open market with that of the primary producer. The market rate will be higher than the rate of primary producers on account of the interest, freight, insurance, bank commission, etc,
4. With this premise, the Commissioner of Income-tax (Appeals) referred to the details given by the assessee of the purchases made by him from Himachal Aluminium Co. Ltd. and other sales effected from HindustanAluminium Co. Ltd. of the same commodity indicating that there was no extra commercial consideration and the sale rate was more or less in the same range as the purchase consideration by the appellant. The similar details in regard to other purchases were also given. Thus finding the sale rate of the primary producers will naturally be on a lower consideration as compared to other persons, no adverse inference can be drawn against the assessee for having paid excessive price to the aforesaid concerns by comparing the sale rate of the primary producers. However, finding that in two purchases of steel wire effected by the appellant in August, 1988, and November, 1988, where the purchase rate was different from higher vis a vis the market rate and the size of the wire was practically the same, the difference so paid was subjected to the provisions of Section 40A(2) and the excess amount of expenses estimated at Rs. 13,330 were sustained as additions under Section 40A(2).
5. These findings of the Commissioner of Income-tax (Appeals) were affirmed by the Tribunal vide order under appeal, by expressing agreement with detailed reasons given by the Commissioner of Income-tax (Appeals).
6. From the aforesaid it is apparent that Hindustan Aluminium Co. Ltd. and Himachal Aluminium Co. Ltd. are primary producers of the raw materials and other persons from whom the assessee has made purchases in addition to purchases made by him from the two primary producers are dealers in the open market and not producers. Whether the assessee has paid the price or is deemed to have paid the price to the sister concerns in excess of what is the prevailing market price of the commodity is primarily a question of fact depending on the appreciation of material for finding prevailing market prices and comparison with the prices paid, coupled with business expediencies.
7. The Tribunal has, by taking into consideration the material, particularly, the details furnished by the assessee about the sales made by the alleged sister concerns to other customers in almost the same range at which goods have been sold by the sister concerns reached a finding of fact that in the transactions with these concerns no excessive payment has been made than what is prevailing from the price in the open market and to the extent in respect of such transactions, the Commissioner of Income-tax (Appeals) found that those transactions it contained the increased excess payment the additions have been made. There has been no challenge to the finding that looking to the requirement of the Electricity Board to which the end-product of the assessee was to be supplied and there was short supply of material from the primary producers which it allowed to the producing of material from the open market to fulfil the contractual obligations. The Tribunal agreed with the reasoning given by the Commissioner of Income-tax (Appeals).
8. In the aforesaid facts and circumstances of the case, we are of the opinion that the finding recorded by the Tribunal that no case for excessive payment has been made out by the Revenue on appreciation of facts is essentially question of fact and no substantial question of law arises for consideration in this appeal.
9. As a result, this appeal fails and is hereby dismissed with no order as to costs.