B. P. Jeevan Reddy, C. J. - (1.) THE question stated for our opinion is : "Whether, oh the facts and in the circumstances of the case, there was material for the Tribunal to hold that services were actually rendered by Messrs. J. K. Traders Ltd., as sole selling agents, entitling them to the commission claimed to have been paid by the assessee-company ?",
(2.) THE assessee is a public limited company engaged in the manufacture and sale of iron, steel bars, rods and railway track material, etc. THE assessment years concerned herein are 1959-60 and 1962-63. During the relevant previous years", the assessee had appointed Messrs. J, K. Traders Ltd. as its sole selling agent. It was provided commission of 1 1/4 per cent. on sales effected by the assessee. During the assessment proceedings, the Income tax Officer called upon the assessee to prove the actual work done by the sole selling agent. Accordingly, the assessee placed certain material before him after perusing which the Income-tax Officer took the view that, practically, no service was rendered by the sole selling agent. He disallowed the claim for deduction on that account. On appeal, the Appellate Assistant Commissioner agreed with the Income-tax Officer and dismissed the appeal. On further appeal, however, the Tribunal took the view that there was material to show that services were being rendered by the sole selling agent. THE Tribunal pointed out that the genuineness of the agreement is not disputed nor is the actual payment disputed. It pointed out that Clauses 7 and 9 of the agreement placed certain onerous obligations on the sole selling agent whereunder the agent was obliged to indemnify the assessee against all losses caused by non-recovery of bills, debts outstanding and other losses caused by the break or non-performance on the part of any person whatsoever of any contract entered into between such person and the assessee-company through the agent. Indeed, the Tribunal referred to instances where the sole selling agent indemnified the assessee for amounts not collected by them. It was also shown that the selling agent was preparing the bills and also procuring orders for the products of the assessee-company. In the above circumstances, it cannot be said that there was no material before the Tribunal to show that services were actually rendered by the sole selling agent. It, may be noticed that the justifiability of the quantum of commission is not referred to us. In the circumstances, the question referred to us is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. No costs.;