ITR Nos. 2 and 3 of 1984 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
ITR Nos. 2 and 3 of 1984
Date of decision: 21.11.2008
The Commissioner of Income Tax, Haryana, Rohtak
-----Applicant
Vs.
M/s Porritts Spencer (Asia) Limited, Faridabad
-----Respondent
CORAM:- HON’BLE MR JUSTICE ADARSH KUMAR GOEL
HON’BLE MR JUSTICE L.N.MITTAL
Present: Mr. Yogesh Putney, Sr.Standing Counsel for the
revenue.
Mr. Santosh Aggarwal, Advocate
With Mr.Avinash Chander Jain, Advocate for the
assessee.
Adarsh Kumar Goel, J
1. The Income Tax Appellate Tribunal Delhi Bench ‘C’
Delhi, has referred the following substantial questions of law for
opinion of this Court, arising out of its order dated 23.10.1982 in ITA
Nos.928/Del/79 and 944/Del/79, for the assessment year 1976-77, at
the instance of the revenue:-
ITR No.2 of 1984
“1) Whether on the facts and in the circumstances of
the case, the expenditure of Rs.19186/- incurred on the
maintenance of the accommodation provided to
ITR Nos.2 and 3 of 1984 2Mr.N.Nath, Rs.24,446/- by way of reimbursement of
the medical expenses and Rs.13,560/- out of servant’s
wages constitute “perquisite” for computation of the
disallowance under section 40A(5) of the IT Act, 1961?
2) Whether on the facts and in the circumstances of the
case the disallowance on account of perquisite the value
of car provided by the assessee to the director employee
Mr. N.Nath should be computed in accordance with
Rule 3 of the Income Tax Rules, 1962?
3) Whether on the facts and in the circumstances of the
case, the rent of the garage and servant quarters
constitute ‘perquisite’ for the purpose of working out
the disallowance under section 40A(5) of the Act?
4) Whether on the facts and in the circumstances of the
case, the disallowance under Rule 6 D of the IT Rules
should be worked out by making the computation
according to the aggregate expenditure incurred by each
and every employee during the year and not on the
basis of per trip?
5) Whether on the facts and in the circumstances of the
case, the provisions of Rule 6D of the IT Rules, 1962
are applicable in respect of the stay of Mr. H.Ingham?
ITR Nos.2 and 3 of 1984 3
ITR No.3 of 1984
“1) Whether on the facts and in the circumstances of
the case, the amount of Rs.20,027/- and Rs.3600/-
respectively representing proportionate expenses for
personal use of car and garage rent should be treated as
perquisite for the purpose of working out the
disallowance under section 40A(5) of the Income tax
Act in the case of Shri K.C.Tapedar, an employee of the
company?
2. Whether on the facts and in the circumstances of the
case, the sum of Rs.9,397/- reimbursed to the employee
as house rent allowance should be treated as perquisite
for the purpose of disallowance under section 40A(5) of
the Act?
3) Whether on the facts and in the circumstances of the
case, the assessee was entitled to the depreciation on the
technical know how capitalized by the assessee
company?
2. The assessee is a company incorporated under the
Companies Act, 1956. The assessee, inter-alia, made following claims
during the assessment year in question:-
(i) Deduction of expenditure incurred on the
maintenance of accommodation provided to Shri
N.Nath, one of the directors. Medical
ITR Nos.2 and 3 of 1984 4reimbursement and servant’s wages to different
employees.
(ii) Perquisite value of car provided to Shri N.Nath.
(iii) Rent of garage and servant quarter.
(iv) Travelling expenditure.
(v) Expenditure on stay of Shri H.Ingham.
(vi) Expenses on personal use of car and garage rent.
(vii) Amounts spent on use of car. The assessee
claimed that the entire amount spent on car was
for its business and so was the garage rent.
(viii) Reimbursement of house rent allowance to the
extent of Rs.9397/-.
(ix) Depreciation on technical know how.
3. The Assessing Officer rejected the claims of the assessee
and added back Rs.19186/- towards maintenance of accommodation
provided to Shri N.Nath; Rs.24446/- towards reimbursement of
medical expenses; Rs.13560/- towards servants’ wages, which were
held to constitute perquisite for computing disallowance under section
40A(5) of the Act; perquisite value of car provided to Shri N.Nath
was held to be disallowable; rent of garage and servant quarter were
held to constitute perquisite for disallowance under section 40A(5);
expenditure incurred on traveling was held to be disallowable under
Rule 6D by making computation according to aggregate expenditure
incurred; Rule 6D was held to be applicable in respect of expenditure
ITR Nos.2 and 3 of 1984 5
on stay of Shri H.Ingham; proportionate expenses on personal use of
car and garage rent attributable to personal use was directed to be
worked out towards disallowance under section 40A(5); amount
reimbursed towards HRA being Rs.9397/- was treated as perquisite
under section 40A(5) and claim for depreciation on technical know
capitalized by the assessee was disallowed.
4. The CIT(A) partly allowed the claims of the assessee,
which gave rise to ITA No.928/Del/83 (79), at the instance of the
revenue (it is pointed out that 1983 is a mistake in the printed paper
book) and ITA No.944/Del/79 at the instance of the assessee.
5. The Tribunal accepted the appeal of the assessee and
rejected the appeal of the revenue.
6. We have heard learned counsel for the parties and perused
the record.
7. Learned counsel for the parties state that all the questions
referred are already covered by earlier judgments of the Hon’ble
Supreme Court or of this Court.
8. We proceed to dispose of the questions referred as under:-
ITR No.2 of 1994
Re:Q.No.1
9. It has not been disputed by the learned counsel for the
parties that the question of expenditure on maintenance of
ITR Nos.2 and 3 of 1984 6
accommodation provided to Shri N.Nath is covered in favour of the
revenue by judgment of this Court in CIT v. Porritts & Spencer
(Asia) Limited, 255 ITR 189. Following the said judgment, we
decide this part of the question in favour of the revenue and against
the assessee.
It is further undisputed that question with regard to claim
for medical reimbursement stands covered in favour of the assessee
by the judgment of the Hon’ble Supreme Court in CIT v. Mafatlal
Gangabhai & Co.(P) Limited, 219 ITR 644. Accordingly, this part
of the question is decided against the revenue and in favour of the
assessee.
It is undisputed that question with regard to wages of
servants is covered in favour of the revenue by judgment of the
Hon’ble Supreme Court in CIT v. British Bank of Middle East, 251
ITR 217 and judgment of this Court in Porritts & spencer (Asia)
Limited (supra). Accordingly, this part of the question will stand
answered in favour of the revenue and against the assessee.
Re.Q.No.2
10. It has not been disputed that the question is covered
against the assessee by judgment of the Hon’ble Supreme Court in
British bank of Middle East (supra). Accordingly, this question will
stand answered in favour of the revenue and against the assessee.
ITR Nos.2 and 3 of 1984 7
Re.Q.No.3
11. It is undisputed that this question is covered in favour
of the assessee by judgment of this Court dated 16.9.2008 in ITR
Nos.80-82 of 1982 (Porritts & Spencer (Asia) Limited v. The
Commissioner of Income tax, Haryana). Accordingly, this
question will stand answered in favour of the assessee and against
the revenue.
Re.Q.No.4
12. It is not disputed that this question is covered against the
assessee by judgment of this Court in CIT v. Porritts & Spencer
(Asia) Limited, 241 ITR 126. Accordingly, this question is answered
in favour of the revenue and against the assessee.
Re.Q.No.5
13. It is not disputed that this question is covered against the
assessee by judgment of this Court dated 16.9.2008 in ITR Nos.80 to
82 of 1982 in the case of the assessee itself. Accordingly, this
question will stand answered against the assessee and in favour of the
revenue.
ITR No.3 of 1984
Re.Q.No.1
14. It is not disputed that identical question has been
answered in favour of the assessee in judgment of this Court dated
ITR Nos.2 and 3 of 1984 8
16.9.2008 in the case of the assessee itself in ITR Nos.80 to 82 of
1982. Accordingly, this question will stand answered against the
revenue and in favour of the assessee.
Re.Q.No.2
15. It is not disputed that identical question was answered in
favour of the assessee in judgment of the Hon’ble Supreme Court in
Mafatlal (supra) and Sukhjit Starch & Chemicals Limtied v. CIT,
221 ITR 308. Accordingly, this question will stand answered against
the revenue and in favour of the assessee.
Re.Q.No.3
16. It is not disputed that identical question has been
answered in favour of the assessee in judgment of this Court in
Porritts & Specer (Asia) Limited v. CIT, 180 ITR 211.
Accordingly, this question will stand answered against the revenue
and in favour of the assessee.
17. The references are disposed of accordingly.
(Adarsh Kumar Goel)
Judge
November 21, 2008 (L.N.Mittal)
'gs' Judge