A.K. Sen Gupta, J. - (1.) In this reference under Sec. 256(1) of the Income -tax Act, 1961 ('the Act') for the assessment year 1980 -81 the following questions of law have been referred to this Court: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in that the commission of Rs. 3,82,959, Brokerage of Rs. 39,952 and Salesmen's Travelling Expenses of Rs. 5,09,739 should not constitute the Sale Promotion expenses so as to fall within the ambit of Sec. 37(3A) of the Income -tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the ITO was not justified in making addition of Rs. 34,198 out of export of machineries to P.T. Kusum Products, Indonesia, by invoking the provision of Sec. 92 of the Income -tax Act, 1961? It is not in dispute that the first question is now concluded by the decision of this Court in the case CIT v/s. Hindusthan Motors Ltd. (IT Reference No. 134 of 1985, dated 23 -2 -1990]. Following the said decision we answer the first question in this reference in the affirmative and in favour of the assessee. The facts relating to the second question are that during the relevant accounting year the assessee -company made transaction with P.T. Kusum Products, Indonesia, a non -resident company, in selling the equipments and machineries. The value of the machineries was Rs. 2,00,805 (Rs. 2,63,398 minus Rs. 62,593 including freight, port and other charges to the tune of Rs. 31,306). The machineries were stated to have been sold at Rs. 1,66,607. The ITO found that the business of selling machineries and equipments was carried on, as in earlier year, between the resident -assessee and the non -resident, P.T. Kusum Products, Indonesia, and there was close connection between the resident - assessee and the non -resident company. Thus, the sale of machineries and equipments was so arranged that the transaction between them produced no profit at all, rather there was a loss of Rs. 34,198 to the resident -company. So the ITO invoked the provision of Sec. 92 of the Act and Rs. 34,198 (Rs. 2,00,805 - Rs. 1,66,607) was added and included in the assessment as income of the assessee during the year.
(2.) The assessee preferred an appeal before the Commissioner (Appeals) against the decision of the ITO. The Commissioner (Appeals) following the order of the Tribunal on this issue for the earlier assessment years deleted the addition made by the ITO.
(3.) The department then preferred an appeal before the Tribunal against the decision of the Commissioner (Appeals) and the Tribunal also following its order for the assessment years 1977 -78 and 1978 -79 in the assessee's own case upheld the order of the Commissioner (Appeals).;