COMMISSIONER OF INCOME TAX Vs. PREMIER VEGETABLE PRODUCTS

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following two questions of law arising out of its order dated November 28, 1980, in respect of the assessment year 1974-75 :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner deleting the disallowance of Rs. 15,003 on account of provision for bonus ? "

(3.) IN respect of disallowance of non-lifting commission, it was found that the company failed to supply the products to some of the distributors and, therefore, the non-lifting commission was to be paid at the rate of 50 paise per tin. Since the option was to be exercised by the distributors twice in a year to invoke Clause IV of the agreement, payment was considered under the agreement for business considerations. It was also explained that the work of the company was divided in different zones and freight was to be borne by the company and, therefore, it was more profitable to supply the commodity to certain zones which are nearby as a result of which distributors of other zones could not be supplied vanaspati. The price of vanaspati was found to be lower than the price fixed by the Government. The Tribunal found that under the agreement if the company fails to supply the products to the distributors, it would be liable to pay non-lifting commission and option was given to the distributors to choose. The commission so paid for the failure of the company to supply the products because of non-availability of the products was to save freight charges. Even for failure of distributors to lift the goods the commission was paid under the agreement. It was not for extra-commercial considerations and it was found that there is no material on record to show that extra-commercial considerations were there to appoint distributors.