COMMISSIONER OF INCOME TAX Vs. USHA INTERNATIONAL LIMITED

JUDGEMENT

(1.) THE petitioner is seeking reference of the following two questions to this Court : "(1) Whether the Tribunal was correct in law in holding that 35per cent of the expenditure of Rs. 1,07,133 incurred on serving tea, soft drinks, lunches and dinners on occasions when both the customers and the employees were present, pertained to expenditure incurred on employees and was not hit by Explanation 2 to S. 37(2A) of the IT Act, 1961 ?

(2.) AS regards the first question, by invoking the provisions of S. 37(2A), the ITO estimated that 25per cent of the expenses incurred would be allowable as a deduction by virtue of Expln. 2 to s. 37(2A). This was merely an estimate and, in appeal, the CIT (A) increased this figure to 35per cent. This increased figure has been maintained by the Tribunal. In our opinion, no question of law arises for the simple reason that, even as per the ITO, some of the expenses of Rs. 1,07,133 would fall under Expln. 2 to S. 37(2A). How much is the amount which will fall under that Expln. 2 is a question of fact. The conclusion of the Tribunal that it is 35per cent which will fall under that Expln. is a finding of fact and no question of law arises. The facts of the present case are entirely different from the facts of the earlier case. In the present case before the ITO, the break -up of the expenses was given and, thereafter, it is a finding of fact as to how much amount would fall under Expln. 2 to S. 37(2A).

(3.) IN our opinion, question No. 2, however, is a question of law and we direct the Tribunal to state the same and refer it to this Court.