A NATESA IYER Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS tax reference arises under the Indian Income-tax Act. The assessee was assessed on his business income for the assessment years 1953-54 and 1954-55. The relevant accounting years are the calendar years 1952 and 1953. In computing the business income the assessee claimed as permissible deduction the salary and bonus paid to his son, Sankaran, who was employed in the business. The salary and bonus payments claimed as deduction by the assessee for the two assessment years were as follows: assessment years Salary Bonus 1953-54 Rs. 12000 per year Rs. 3000 per year 1954-55 do do Rs. 3500 per year the Additional Income-tax Officer, Tinnevelly allowed as deduction salary, for both the years, of Rs. 4500 a year and allowed Rs. 900 as bonus for the year 1953-54 and Rs. 1400 as bonus for 1954-55 as proper deduction. The rest of the assessee's claim for deduction was disallowed. The assessee preferred an appeal to the Appellate Assistant Commissioner, Tuticorin. The Appellate authority except for enhancing the deduction of bonus for the year 1953-54 to Rs. 1100 affirmed the decision of the Income-tax Officer. There was a further appeal to the Income-tax Appellate Tribunal, Madras, which however dismissed the appeal, affirming the decision of the Appellate Assistant Commissioner. The assessee filed an application under Section 66 of the Act to the Tribunal for reference of questions of law to this court but failed. The assessee filed an application in this Court under Section 66 (2)of the Act raising the following question: "whether on the facts and in the circumstances of the case there was material which justified the Tribunal in disallowing the payments of Rs. 7000 as salary and Rs. 2100 as bonus to the manager, Sankaran, in each of the assessment years?"

(2.) THE figures contained in the question as framed are not correct. The disallowed portion of the salary in both the years is Rs. 7500 per year. The bonus amount disallowed for the year 1953-54 is only Rs. 1900. This inaccuracy does not however affect the real question for determination, namely, whether the assessee is entitled to claim by way of proper deduction the entire amount of salary and bonus paid by him to the employee, his son.

(3.) AT the time when this Court ordered the application for reference a direction was given to the Tribunal that it should allow the assessee and the department an opportunity to place further material and to submit the case with its findings. This has now been done by the Tribunal, it is not now necessary for us to express any opinion on the question whether the direction to take further evidence in the matter was properly given in a proceeding under Section 66 of the Act.