AMBICA MILLS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Ahmedabad, has referred the following two questions for the opinion of this Court under S. 256(1) of the IT Act, 1961; the bracketed portion i.e. [/40(c)] having been inserted by us for reframing it. For asst. year 1980 -81:

(2.) THE assessee filed two appeals in respect of asst. yrs. 1980 -81 and 1981 -82 against the orders of the CIT(A) before the Tribunal. It was contended before the Tribunal by the assessee that the said expenditure in respect of medical treatment of the managing director was not required to be considered for disallowance under S. 40A(5) or 40(c) of the Act. It was contended that since the amount was paid in cash, it was outside the term "perquisite". The Tribunal following the decision of Special Bench of Tribunal in the case of Glaxo Laboratories to the effect that the provisions contained in S. 40A(5) of the Act were applicable and cash reimbursement of the medical expenses was required to be considered while resorting to disallowance in excess of ceiling limit prescribed and that even considering the language contained in S. 40(c) of the Act the issue was favourable to the Revenue, confirmed the order passed by the CIT(A). As regards the year in which the disallowance was required to be made, the Tribunal found no justification to interfere with the decision taken by the CIT(A).

(3.) THE provisions of ss. 40(c) and 40A(5) as applicable during the relevant assessment year, read as under :