COMMISSIONER OF INCOME TAX Vs. ARVIND MILLS LIMITED

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Ahmedabad Bench 'A' has referred the following five questions for the opinion of this Court : 1 "Whether, the reimbursement of medical expenses and House Rent Allowance to the Managing Directors are to be considered for the purpose of computing the disallowance under sec.40(c) of the Act." 2 "Whether, the cash payment of House Rent Allowance to the employees is to be considered for purpose of computing the disallowance u/s.40A(5) of the Act." 3 "Whether, in law and on facts, the assessee is entitled to a deduction of Rs.2,69,842.00 paid to M/s.Mettur Beardsell Ltd., on account of royalty". 4 "Whether, the disallowance under Rule 6D is to be computed by grouping together all the tours undertaken by a person during the year". 5 "Whether, in law and on facts, the assessee was entitled to deduction under section 80-HHC of the Act".

(2.) The assessment year is 1984-85 and the relevant accounting period is 1983. So far as question Nos. 1 to 4 are concerned, it is common ground between the parties that the issues are concluded by the decisions of the Apex Court or this Court and hence, it is not necessary to set out the facts in detail.

(3.) Question No.1 is in relation to two items, viz. (i) reimbursement of medical expenses and (ii) House Rent Allowance paid to Managing Directors and whether the said items are required to be considered for the purpose of computing the limits for disallowance under section 40(c) of the Income Tax Act,1961 (hereinafter referred to as 'the Act'). In so far as the reimbursement of medical expenses is concerned this Court in the case of Aroon K. Basak Vs. Union of India, 236 I.T.R. 931 has laid down that the same is required to be considered for the purpose of computing disallowance under section 40(c) of the Act. As far as House Rent Allowance is concerned, the Apex Court has in the case of Commissioner of Income Tax Vs. Mafatlal Gangabhai & Co. (P) Ltd., 219 I.T.R. 644 laid down that the said item is not to be included for the purpose of disallowance under section 40(c) of the Act. The question No.1 is therefore answered accordingly i.e.the first portion against the assessee and the second portion against the revenue.