1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- 1. INCOME TAX APPEAL No. 121 of 2006 C.I.T.-I-JODHPUR V/S M/S MEC SHOT BLASTING EQUIPMENT 2. INCOME TAX APPEAL No. 122 of 2006 C.I.T.-I-JODHPUR V/S M/S MEC SHOT BLASTING EQUIPMENT 3. INCOME TAX APPEAL NO.123 OF 2006 C.I.T.-I-JODHPUR V/S M/S MEC SHOT BLASTING EQUIPMENT Mr. KK BISSA, for the appellant / petitioner Mr. ARUN BHANSALI, for the respondent Date of Order : 25.9.2008 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI KISHAN SWAROOP CHAUDHARI,J. ORDER ----- These three appeals arise out of common judgment of learned Tribunal for different assessment years, and are, therefore, being decided by this common order. Appeals were admitted by framing following substantial questions of law: “(1)Whether on the facts and in the circumstances of the case, the 2 learned ITAT was justified in confirming the order passed by the Commissioner of Income Tax (Appeals), Jodhpur whereby the payment of commission @ 15% of the net sales has been held to be justified? (2) Whether on the facts and circumstances of the case, the learned ITAT was justified in confirming the order of the CIT (A), allowing the assessee's claim of deduction of bank guarantee commission to its directors and the relatives ignoring the fact that these expenses were not incurred wholly and exclusively for the business purpose and the bank advanced loans against the hypothecation of goods/assets of company?” Out of these two questions, so far as first question is concerned, on the aspect of the admissibility of the commission, paid to the sister concern, the matter is covered by a decision of this Court dt. 13.12.2007, rendered in Income Tax Appeals No.57, 58 and 59 of 2003, M/s Laxmi Engineering Industries vs. ITO Udaipur. Then so far as question of reasonableness of the extent of commission is concerned, it has been held by Hon'ble Supreme Court, in case of M/s Upper India Publishing House Pvt. Ltd. vs. Commissioner of Income-tax, reported in AIR 1979 SC 1724, that the question, as to whether the expenditure is excessive and unreasonable, is a pure question of fact. By this judgment, the Hon'ble Supreme Court, by interfering with the order of the High Court, 3 directing the reference to be made, set aside the order. Thus, the cumulative effect to the judgments, referred to above, is that the question is required to be answered against the Revenue, and in favour of the assessee. So far as second question is concerned, this again is covered by the judgment of this Court in CIT vs. Ayurvedic Sevashram P.Ltd., reported in (1986) 159 ITR 112, which judgment has been followed in the judgment of this Court also, in bunch of Income Tax Appeals, led by Income Tax Appeal No.51/2005, CIT vs. M/s Metalizing Equipment Co.(P) Ltd. decided on 5.5.2008. In view of the above two judgments, the second question is also covered, against the Revenue and in favour of the assessee. Consequently, both the questions are answered, against the Revenue and in favour of the assessee. The appeals, thus, have no force, and the same are dismissed. ( KISHAN SWAROOP CHAUDHARI ),J. ( N P GUPTA ),J. /m.asif/