COMMISSIONER OF INCOME TAX Vs. KAMLA DEVI

JUDGEMENT

(1.) Under section 66(1) of the Income Tax: 1922, (hereinafter called the Act) the following question has been referred to this Court for opinion:

(2.) The assessee the late Shri Prem Nath, now represented by his legal representatives, was getting a salary as Governing Director from Messrs Prem Nath Motors (P) Ltd. For the assessment year 195"-58. the assessee filed his return of income in which he included a sum of Rs. 7,000 as being his receipt from the said company by way of entertainment allowance. There is no dispute that the assessee had not been receiving such an allowance from his present employer from before the 1st April, 1955.

(3.) The Income Tax Officer held that the actual incurring of expenses over entertainment had not been proved and, therefore, the claim was not allowable. The Appellate Assistant Commissioner accepted the claim of the assessee to a deduction of Rs. 4,800.00 as being l/5th of his salary of Rs. 24,000.00 per annum under section 7(2)(ii) of the Act. The Income Tax Appellate Tribunal went even farther and was of the view that the assessee was entitled to deduct the entire sum received by him by way of entertainment allowance in computing his income by way of salary. Since, however, there was no appeal by the assessee against the order of the Appellate Assistant Commissioner allowing only Rs. 4,800.00 to be deducted, the actual result was that only a deduction of Rs. 4,800.00 was allowed. The Revenue, however, contended that the benefit of section 7(2)(ii) was not available to the assessee at all inasmuch as the assessee had not been receiving such an entertainment allowance from before the 1st of April 1955 and, therefore, no deduction at all should be made on this account in computing the total income of the assessee from salary. Hence this reference at the instance of the Revenue.