SUNIL AMBWANI, ADITYA NATH MITTAL J. - (1.) WE have heard Sri R.R. Agarwal for the appellant. Sri Govind Krishna appears for the respondent.
(2.) THIS Income Tax Appeal under Section 260 -A of the Income Tax Act, 1961 (the Act) has been filed against the order dated 15.11.2001, passed by the Income Tax Appellate Tribunal, Allahabad Bench, Allahabad in Income Tax Appeal No. 1068(Alld)/1994 for Assessment Years 1990 -91, connected with Income Tax Appeal No. 1069 (Alld)/1994 for assessment year 1991 -92, by which the appeal of the revenue was allowed. The appeal was admitted on the following substantial question of law: - "Whether the Tribunal is legally justified in confirming the part disallowance of commission without making out any case that during the year under consideration, appellant has not rendered the same services as have been rendered in previous years?
(3.) THE brief facts giving rise to this appeal are that the assessee - appellant was engaged in the business of manufacturing and selling of loud speakers and electronic components. The Company entered into an agreement with M/s. Laxmi & Co., to act as sole selling agent for the assessee. The assessee claimed allowances for the commission paid to M/s. Laxmi & Co., on the basis of services rendered by M/s. Laxmi & Co. to the assessee. The AO disallowed the expenses partly, on the ground that in the previous assessment year, similar relief was given, and by applying the provisions of Section 40 -A(2)(a) of the Act, commission @ 1.5 % only was reasonable. The CIT (A) deleted the addition. The Income Tax Appellate Tribunal in the appeal filed by the revenue, set aside the order of the CIT (A) and restored the order of AO on the point of disallowance of a part of expenditure having incurred on account of commission by invoking the provisions of Section 40 -A(2)(a) of the Act;