Case: Basti Sugar Mills Co. Ltd Vs. Commissioner of Income Tax, Delhi and Rajasthan

2. The reference was asked for by the three different Companies by whom the above appeals are filed in respect ofof 1965 connected with I.T.C. Nos.of 1965 arising from a common order of theAppellate Tribunal, Delhi Bench. As the facts in the case and questions of law sought to be referred were common, the following tabular statement will give an idea of the appeals filed by the three Companies, who are the appellate together with the particulars regarding the years of assessment and.A. No. I.T.C. No. Assessment Year Name of Company1364/673 Basti Sugar Mills1365/679 "1367/671 Nawabganj Sugar Mills1369/672 "1371/673 Punjab Sugar Mills1373/673. The Basti Suger Mills Company Limited which is the appellant in Civil Appeals Nos. 1364 to 1367 owned two sugar factories at Basti and Waltharganj. It is their case that for the purpose of selling their out put of sugar they appointed Selling agents at a commission ofper cent of all sales of sugar effected through the agents. Their Selling agent prior to 1944 was M/s. Gursarandas Kapur & Sons at Kanpur. On 26, 1944 by a resolution of the Board of Directors, the Company appointed M/s. Gokul Nagar Sagar Mills Co. Ltd., as the Selling agents atcommission. In the course of the original assessment for the yearwhich was completed on March 10, 1950 theOfficer called upon the said Company to furnish details of the item of work done by M/s. Gokul Nagar Sugar Mills Co. Ltd. as Selling agents. The Company informed theOfficer that the said Selling agents have been doing the work that they were expected to do and they in turn had appointedon commission basis for effecting sale at various places. TheOfficer accepted this explanation and allowed, by order dated June 21, 1949 a deduction for Rs. 47, 921/paid as commission to the selling agents. But when the assessment proceedings for the assessment yearin respect of Nawabganj Sugar Mills Co. Ltd. was being dealt with, theOfficer took the view that the selling commission should not be allowed and accordingly issued a notice dated March 29, 1954. under sec. 34(1)(a) of theAct, 1922 (hereinafter to be referred as the Act). The Company filed a return under protest.4. Regarding Nawabganj Sugar Mills Company Ltd., which is appellant in Civil Appeals Nos.of 1967 the facts are also more or less identical except that for the assessment yearax Officer by his order as dated February 21, 1951 allowed a deduction of Rs. 60, 980/as the amount paid as commission to the selling agents M/s. Gokul Nagar Mills Co. Ltd. For the assessment yearalso the commission paid to the said selling agent was allowed as deduction. But for the assessment yearax Officer issued a notice dated January 19, 1957 requiring the said company to explain why the amount of commission claimed to have been paid by them to the selling agents should not be disallowed.

Court's reasoning:
17. We are of the opinion that there is no substance in these appeals. We have gone through the order of theOfficer, the Appellate Assistant Commissioner, as well as theAppellate Tribunal. No doubt, there is a resolution produced by the appellants dated July 26, 1944 in and by which the sugar selling agency of Nawabganj Sugar Mills Co. Ltd. is given to M/s. Gokul Nagar Sagar Mills Co Ltd. onThere is no other evidence to show the nature of the arrangement or as to how exactly this resolution is to be carried out.18. A reading of questions Nos. 1 to 3 clearly shows that the points raised therein are purely questions of fact. But as the contention of Mr. V. S. Desai is that certain material facts have not been considered at all by the Tribunal and hence the findings arrived at by it cannot be conclusive, in view of this infirmity, we will refer to the evidence on record not with a view to decide whether the Tribunal has properly appreciated the evidence, but to see whether there was evidence to support the findings recorded by the Tribunal and whether that finding could on that evidence be reasonably reached.19. We have already referred to the resolution dated July 26, 1944. The first criticism of Mr. V. S. Desai is that the evidence ofappointed by the selling agent has not been considered by the Appellate Tribunal. The two witnesses in this regard are Ram Sahai Dhir and Shiv Nand Verma. The contention of Mr. V. S. Desai that the evidence of Ram Sahai Dhir has not been considered, as such, by the Appellate Tribunal, is only technically correct because it is seen from the order of the Appellate Tribunal that it has referred to the relationship between the appellants and a company known as M/s. Ramdev & Company. Ram Sahai Dhir in his evidence has clearly stated that he is the sole proprietor of M/s. Ramdev & Company. He has further stated that after he got the sub agency from Gokul Nagar Sagar Mills Co. Ltd. he along with his brother and son formed a partnership for this purpose in the name of M/s. Ramdev & Company. The Appellate Tribunal in paragraph 7 of its order has considered a telegram sent on September 1, 1948 to M/s. Ramdev & Company by the Chairman of Nawabganj Sugar Mills Co. Ltd. That telegram states that the agency of M/s. Gursarandas Kapur and Sons has been terminated and M/s. Ramdev & Company is asked to sell and freely secure challans. Ram Sahai Dhir in his evidence has stated that M/s. Gursarandas Kapur and Sons. were the selling agents of the appellants originally and that he started his own sugar business in or about 1947. Therefore, the telegram, as held by the Appellate Tribunal, clearly shows that the appellants were having direct dealings with Ramdev & Company and that M/s. Gokul Nagar Sugar Mills Co. Ltd. is no where in the picture. This telegram also shows that this privity of contract between the appellants and Ramdev & Company will not be there if Ramdev & Company were theappointed by M/s. Gokul Nagar Mills Co. Ltd. Therefore., it is clear that the relationship between the appellants and M/s. Ramdev & Company of which Sri Ram Sahai Dhir is the sale proprietor has been considered by the Appellatewe have stated earlier, we have only referred to these items of evidence on record to show that the finding of the Appellate Tribunal are based on the material on record and that the finding is such which could on that evidence be reasonably reacced.22. The statement in order of the High Court that the Appellate Tribunal has not referred to the evidence of Ram Sahai Dhir as such is prima facie correct. But the High Court missed the crucial fact that his evidence is really as proprietor of M/s. Ramdev & Company and relationship between this company and the appellants has been considered by the Appellate Tribunal.23. As laid down by this Court in Udhavdas Kewalram vs. Commissioner ofBombay City, theAppellate Tribunal has to act judicially in the sense that it has to consider with due care all material facts and the evidence in favour of and against the assessee and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. From the discussion contained above it is clear that it cannot be said that the Appellate Tribunal in case before us has ommitted to consider any material fact or any material piece of evidence.24. To conclude we are in agreement with the findings of the High Court that no point of law arises out of questions Nos. 1 to 3 and the High Court was justified in declining to give direction to the Appellate Tribunal to state a case and refer those quest