the commissioner of income-tax-aurangabad vs. SAMARTH S.S.K. LTD

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ITXA/271/2007HC Bombay17 September 2007Bench: HON'BLE SHRI JUSTICE F.I. REBELLO, HON'BLE SHRI JUSTICE J.P. DEVADHAR2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the question of law was answered against the revenue and in favour of the assessee. This decision was based on a previous judgment of the same Court in the case of Commissioner of Income Tax V/s. Samarth Sahakari Sakhar Karkhana Ltd. in Income Tax Appeal No. 273 of 2007, decided on September 17, 2007. Consequently, the question of law was answered in favour of the assessee and against the revenue. The appeal was disposed of accordingly, with no order as to costs.

What were the facts?

The Commissioner of Income-tax (Appellant) filed an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT) dated January 13, 2006. The appeal pertains to the assessment year 1999-2000 and concerns a dispute regarding the deductibility of 'Bakshish' payments made by the assessee, Samarth Sahakari Sakhar Karkhana Ltd. (Respondent), to the labourers of harvesting and transport contractors. The ITAT had ruled in favour of the assessee, holding these payments as business expenditure.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that Bakshish payment made by the assessee to harvesting and transport contractor’s labourers was out of commercial expediency, whereas such payments are purely voluntary, based on the sweet will of the assessee society and being over and above the agreed price of contracts, do not form part of business expenditure? Assessee's Contention: Not recorded. Revenue's Contention: The revenue argued that the Bakshish payments were purely voluntary, made out of the sweet will of the assessee society, and were in excess of the agreed contract prices. Therefore, they contended that these payments did not constitute business expenditure and should not be allowed as a deduction.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.271 OF 2007 INCOME TAX APPEAL NO.271 OF 2007 INCOME TAX APPEAL NO.271 OF 2007 The Commissioner of Income-tax Aayakar Bhavan, Near Holi Cross High School, Cantonment,Aurangabad. ..Appellant. V/s. Samarth Sahakari Sakhar Karkhana Ltd. Tal. Ambad, Dist. Jalna ..Respondent. Mr.B.M.Chatterjee with Mrs.P.P.Bhosale for appellant. Mr.S.N.Inamdar with A.K.Jasani for respondent. CORAM : F.I.REBELLO CORAM : F.I.REBELLO CORAM : F.I.REBELLO AND AND AND J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. DATED : 17TH SEPTEMBER, 2007. DATED : 17TH SEPTEMBER, 2007. DATED : 17TH SEPTEMBER, 2007.

ORAL JUDGMENT (PER J.P.DEVADHAR, J.) ORAL JUDGMENT (PER J.P.DEVADHAR, J.) ORAL JUDGMENT (PER J.P.DEVADHAR, J.) 1. This appeal is filed by Commissioner of Income Tax under section 260 A of the Income Tax Act, 1961 against the order of the ITAT dated 13/1/2006 relating to the assessment year 1999-00. 2. The appeal is admitted on the following question of law:- " Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that Bakshish payment made by the assessee to harvesting and transport contractor’s labourers was out of commercial expediency, whereas such payments are purely voluntary, based on sweet will of assessee society and being over and above the agreed price of contracts, do not form the part of business CNR No : HCBM020045882007 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:25

-= : 2 : =- expenditure ? " 3. Counsel on both the sides agree that the aforesaid question of law is answered against the revenue and in favour of the assessee by the decision of this Court in the case of Commissioner of Income Tax V/s. Samarth Sahakari Sakhar Karkhana Ltd. in Income Tax Appeal No. 273 of 2007 decided on 17th September, 2007. Accordingly, the question is answered in favour of the assessee and against the revenue. 4. Appeal disposed of accordingly with no order as to costs. (F.I.REBELLO, J.) (F.I.REBELLO, J.) (F.I.REBELLO, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.)

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