Case Law Details

Case Name : CIT Vs. K. J. Business Centre (Delhi High Court)
Appeal Number : ITA No. 88/2007
Date of Judgement/Order : 02/04/2009
Related Assessment Year :
Courts : All High Courts (4379) Delhi High Court (1312)


4. At the outset, we need to underscore that so far as findings of fact are concerned interference of the High Court would be justified only if it appears to it that the conclusions arrived at by the ITAT are palpably perverse. 

5. The entitlement of sundry parties to the receipt of commission essentially entails a determination of facts and the High Court must be loathe to enter into that arena except in the case of perversity. In both the Appeals this question has been dealt with threadbare at all the three stages of the assessment adjudication. In these proceedings we are concerned with the receipt of commission for the letting-out of property belonging to the All India Fine Arts and Crafts Society(AIFACS) to M/s. G.E. International. For the Assessment Year 1994-1995 the Assessee had received Rupees 64,75,000/- as commission from AIFACS. While framing the assessment for Assessment Year 1995-1996 the Assessing Officer noticed that AIFACS had paid a sum of Rupees 15,92,500/- to Manik Enterprises (P) Ltd., Rupees 30,00,000/- to SMC Food Ltd. and Rupees 28,50,000/- to Competent Holding (P) Ltd. The Tenant, namely, M/s. G.E. International also paid commission amounting to Rupees 19,84,000/- to M/s. Arora & Associates, Rupees 2,00,000/- to M/s. Achha & Associates and Rupees 1,84,000/- to M/s. Chetan Investments and Marketing Services. So far as the Appellant is concerned the commission paid by AIFACS was in two instalments, viz. Rupees 40,00,000/- on 31.12.2003 and Rupees 24,70,000/- on 15.2.1994.

6. The CIT(A) did not agree with the finding of the Assessing Officer that the Assessee was, in fact, solely and exclusively entitled to the receipt of the entire commission; that the Assessee had distributed commission to its various benami or family concerns with the intention of spreading its income and thereby evading tax. The CIT(A) also did not agree with the Assessing Officer that the Assessee was not entitled to stagger or spread out the receipt of the commission of Rupees 64,75,000/- over a period of six years. In Assessment Year 1994-1995 the Assessee had shown its income as 1/6th of the said sum of Rupees 64,75,000/-, that is, Rupees 10,78,500/-. Out of this sum the Assessee had claimed that it had to pay commission to M/s. Trehan Estate Agency to the extent of Rupees 8,08,875/-,thus showing only a sum of Rupees 2,69,625/- as taxable. The additions of Rupees 28,50,000/- and Rupees 30,00,000/- paid by AIFACS to Competent Holding (P) Ltd. and SMC Food Ltd. aggregating Rupees 58,50,000/- were deleted by the CIT(A). After duly noting the constitution of ownership of Manik Enterprises (P) Ltd., and the aspect of lifting of corporate veil, the CIT(A) deleted the addition of Rupees 51,75,000/- made by the Assessing Officer. It was also highlighted by the CIT(A) that a company has to bear a higher incidence of tax and, therefore, it would be of no advantage to the Assessee to share the commission and thereby eventually subject itself to a higher taxation. The addition of commission of Rupees 2,00,000/- and Rupees 1,84,000/- to M/s. Achha & Associates and M/s. Chetan Investment & Marketing Services respectively were also deleted. However, the addition of commission of Rupees 8,09,375/- paid by the Assessee to M/s. Trehan Estate Agency was sustained since the CIT(A) considered this to be without consideration and justification. The Tribunal has upset this finding primarily for the reason that payment had not been returned by M/s. Trehan Estate Agency to the Assessee and the fact that there was a distant relationship between them was insufficient reason to disallow the said amount. It is clear that the factual matrix was carefully considered by the CIT(A) as well as the ITAT, calling for no further consideration on our part. The ITAT has observed that the conclusion of the Assessing Officer to the effect that the commission had been distributed to different parties by the Assessee was not based on any materialon record. The ITAT has also opined that it was erroneous for the Assessing Officer to conclude that Manik Enterprises (P) Ltd., M/s.Achha & Associates, M/s.Chetan Investment and Marketing Services and M/s. Arora & Associates were not independently entitled to the receipt of commission as they had no role to play in the subject letting out of property belonging to M/s. All India Fine Arts and Crafts Society(AIFACS) to M/s. G.E. International.

9. None of the arguments addressed on behalf of the Revenue can persuade us to conclude that these findings of fact partake of the nature of perversity. So far as the sharing of the commission between the Assessee and the aforementioned business concerns is concerned, no substantial question of law arises for our consideration.

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