Commissioner of Income-tax Vs. Electric Construction Equipment Co. Ltd. - Court Judgment

Excerpt:
- section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her mother. the minor girl was a citizen of u.k. being born in u.k. her parents had set up their matrimonial home in u.k. and had acquired status of permanent residents of u.k. the child with her mother was supposed to return to u.k. but the mother cancelled her tickets and remained behind in india. the husband thereupon started procededings before the high court of justice, family division. u.k. praying for an order that the minor child be made a ward of the court and for a direction upon the wife to return the minor child to the jurisdiction of the said court. a further direction was given for the passport and other international travel documents of the minor child to be handed over to the solicitors of the husband. a petition seeking protection of minor child was thereupon filed by father of the husband before delhi high court. a direction for handing over custody of child to father of husband was also sought. the high court considering fact that the u.k. court was already in seisin of matter and had passed an interim order and by relying on principle of comity of nations and comity of judgments of the courts of two different countries in deciding the matter directed the wife to take the child of her own to u.k.or hand it over to father of husband to be taken to u.k. as measure of interim custody and that it would be for the u.k. court to decide the question of custody - order was challenged by wife - held, the order of high court was not liable to be interfered with. although, on first impression, it would appear that the interests of the minor child would best be served if she is allowed to remain with the wife, the order of u.k. court cannot be lost sight of., the order of u.k. court except for insisiting that the minor be returned to its jurisdiction, the english court did not intend to separate the child from the mother until a final decision was taken with regard to the custody of the child. the ultimate decision in that regard has to be left to the english court having regard to the nationality of the child and the fact that both the parents had worked for gain in the u.k. and had also acquired permanent resident status in the u.k. english court has not directed that the custody of the child should be handed over to the father but that the child should be returned to the jurisdiction of the courts in the u.k. which would then proceed to determine as to who would be best suited to have the custody of the child. the high court has taken into consideration both the questions relating to the comity of courts as well as the interest of the minor child, which, no doubt, is one of the most important considerations in matters relating to custody of a minor child. - , an income-tax assessed, the tribunal held that the genuineness of the payment could not be doubted as it was clearly proved that it had been paid and had been included by the payee in its profit and loss account.1. the commissioner of income-tax, by this application under section 256(2) of the income-tax act, 1961, prays that the tribunal be directed to state a case and refer the following three questions of law pertaining to the assessment year 1971-72 for the opinion of this court : '1. whether, on the facts and in the circumstances of the case, there was any evidence before the income-tax appellate tribunal to hold that the sum of rs. 6,80,850 paid to six parties as commission was expended exclusively for the purpose of the business and was thus an allowable deduction under section 37(1) of the income-tax act 2. whether, on the facts and in the circumstances of the case, the income-tax appellate tribunal had erred in ignoring the material evidence on record, collected by the income-tax officer during the course of the assessment proceedings, in coming to the conclusion that the commission payments made by the assessed to six parties represented genuine payment to these parties 3. whether, on the facts and in the circumstances of the case, the finding of the income-tax appellate tribunal that the six parties had rendered services for earning commission is perverse having regard to the evidentiary material ' 2. the assessed is a public limited company engaged in the manufacture of certain electrical goods which it supplies mainly to the state electricity boards. it claimed deductions as commission payments. 3. the income-tax officer held that commission payments of rs. 6,80,850 was not expended wholly and exclusively for the purpose of the business and as such were not deductible. 4. the assessed appealed to the commissioner of income-tax and conceded that the initiation of proceedings under section 147(a) of the income-tax act was invalid; it also challenged the finding regarding disallowance of the sum of rs. 6,80,850. the commissioner of income-tax held that the assessed had not disclosed fully and truly all material facts and as a result of the non-disclosure, income chargeable to tax had escaped assessment. consequently, it upheld the initiation of proceedings under section 147(a) of the income-tax act. the commissioner of income-tax also confirmed the disallowance of the entire amount of rs. 6,80,850. 5. the assessed preferred an appeal against both these findings to the income-tax appellate tribunal. the tribunal upheld the validity of the initiation of proceedings under section 147(a) of the income-tax act. however, on the question of merits, the tribunal examined the matter in great detail with regard to the payment of commission to six parties totaling rs. 6,80,850. thereafter, it came to the conclusion that the commission paid to each of the six parties was genuine and that the expenditure had been laid out wholly and exclusively for the purpose of the business. 6. consequently, the commissioner of income-tax moved an application under section 256(1) of the income-tax act for referring the above-mentioned questions for the opinion of this court. on january 13, 1982, the income-tax appellate tribunal rejected the reference application as it was of the view that the conclusion of the tribunal regarding the genuineness of the commission payments was arrived at after appraisal of the entire evidence and material on record and they were essentially of fact not giving rise to an interpretation of any legal principles. 7. it appears to us that the three questions which the commissioner of income-tax wants to be referred are basically different aspects of the same question. the first relates to whether there was any evidence before the tribunal to come to the conclusion that the commission was expended exclusively for the purposes of the business; the second relates to whether material evidence was ignored in coming to the conclusion that the commission payments were genuine and the third relates to whether the finding of the tribunal that the six parties had rendered services for earning commission was perverse. 8. mr. p. c. pandey, learned counsel for the commissioner of income-tax, contended that the findings of the tribunal are perverse as five of the six parties were not traceable and were not income-tax assesseds. he also contended that there is no proof that services were rendered, and since bank accounts were opened in places far away from the given addresses and amounts withdrawn and accounts closed thereafter, the genuineness of the transactions was in dispute. 9. there is no doubt that if there was no evidence before the tribunal to come to the conclusion that the payments made as commission to the six parties were genuine and expended exclusively for the purposes of the business, the findings of the tribunal would be perverse. 10. however, we find from the order of the tribunal that it has dealt with each of the six cases separately and in detail. it has also dealt with the general argument of the parties and has examined the correspondence exchanged between the assessed and the commission agents. it has noticed that the payments were made by account payee cheques and drafts which were cleared through banks. it has also noticed that the total amount of deduction claimed as commission was rs. 10,17,288 and the income-tax officer doubted the genuineness of only rs. 6,80,850. 11. dealing with the commission paid to messrs. emjay trading co., an income-tax assessed, the tribunal held that the genuineness of the payment could not be doubted as it was clearly proved that it had been paid and had been included by the payee in its profit and loss account. 12. the tribunal rejected the observations 'that since profit sector under takings place orders through tenders, there is absolutely no necessity for securing the services of a middleman'. in fact, it observed that such 'services become necessary for several purposes such as passing information to the assessed about the likely demand for their goods by the purchasers, helping the assessed in submitting tenders, to prepare, submit, follow and to inform at all stages the position of tenders and to help the assessed in getting the payments from buyers and also in case of dispute to get the matter settled'. 13. after considering all the material, the tribunal came to the conclusion that the payments made to the six parties were genuine and that the expenditure had been laid out and expanded wholly and exclusively for the purpose of the assessed's business. 14. these findings are based on, inter alia, the correspondence between the parties and are findings of fact. this is not a case of no evidence. the tribunal is the final fact-finding authority, and, if there is some evidence to support the tribunal's findings, it cannot be a case of perversity. no interpretation of any legal principle is involved. 15. consequently, we reject the application, but make no order as to costs.