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HON’BLE SRI JUSTICE G. CHANDRAIAH AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A. No. 59 OF 2001 ORDER:- (per Hon’ble Sri Justice Challa Kodanda Ram) This appeal is preferred by the Revenue, against the order dated 29.09.2000 in I.T.A. No.219/Hyd/95 passed by the Income Tax Appellate Tribunal, Hyderabad Bench “B” (in short “the Tribunal”). The present case is pertaining to the assessment year 1991-1992. 2) This appeal is filed at the instance of the Revenue raising the following question of law under Section 260(A) of the Income Tax Act, 1961 (in short “the Act”). “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the secret commission Rs.1,43,257/- paid to the Govt. Employees is deductible U/s 37(I) of the Income Tax Act?” 3) At the time of hearing, the learned counsel for the Revenue Sri S. Seshidhar Reddy, by placing reliance on the judgment of this Court reported in XL Telecom Pvt. Ltd., Secunderabad Vs. Commissioner of Income Tax, Hyderabad[1], would submit that any amount paid to a Government servant, which is prohibited by law cannot be allowed as expenditure. This legal proposition was not disputed by the learned counsel for the assessee. In the light of the statutory law as well as the binding precedent, the question needs to be answered in favour of the revenue and against the assessee.
4) However, the learned counsel for the assessee would point
out that there is a figure of Rs.1,43,257/-, which has been mentioned as commissions paid to the Government employees is not correct. In fact, the said figure of Rs.1,43,257/- are sales promotion expenses, which were in fact allowed by the appellate commissioner himself. The dispute before the Tribunal was relating to Rs.1,41,020/-, which includes the commissions paid to the individuals apart from the amounts paid to the Government employees. In that view of the matter, the learned counsel would submit that the Assessing Officer has to determine the amounts that were paid to Government employees and only to that extent the disallowance can be made.
5) Inasmuch as, there is no such bifurcation which has been made by the Assessing Officer, it is but just to leave that issue to be determined by the authorities while passing the consequential orders. We also make it clear that in the light of the question which has been raised, we feel it appropriate to modify the question as follows: “Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the secret commission paid to the Government employees is not deductible under Section 37(1) of the Income Tax Act?”
6) In the light of the discussion above, the modified question of law is answered in favour of the revenue and against the assessee.
7) Accordingly, the appeal is disposed of in terms of this order. No order as to costs. Miscellaneous Petitions, if any, pending in this appeal shall stand disposed of.
____________________ G. CHANDRAIAH,J
____________________________ CHALLA KODANDA RAM, J Date:03.12.2013. SSV
HON’BLE SRI JUSTICE G. CHANDRAIAH AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM
ITTA No.59 OF 2001
Date:03.12.2013.
SSV
[1] ITTA No.38 of 2001