COMMISSIONER OF INCOME TAX Vs. SUNDARAM FASTNERS LIMITED

JUDGEMENT

(1.) THE question of law referred at the instance of the Revenue relating to the assessee's assessment year 1980-81 reads as under :

(2.) THE assessee is a company and while determining the income for the assessment year 1980-81, the Income-tax Officer treated the medical expenses reimbursed by the company to its managing director as a part of the remuneration under Section 40(c) of the Income-tax Act and also treated a sum of Rs. 52,406 being the house rent allowance paid in cash and medical reimbursement paid in cash to the executives as forming part of the salary under Section 40A(5) of the Act. THE Commissioner of Income-tax (Appeals) held that they should be treated as part of the remuneration for the purpose of determining the ceiling under Section 40(c) or 40A(5) of the Act. THE Appellate Tribunal, however, held that the medical reimbursement and house rent allowance paid in cash cannot be considered as part of the salary in reckoning the disallowance under Section 40(c) or 40A(5) of the Act. THE Revenue, has challenged the order of the Appellate Tribunal and the question of law set out above has been referred to us for our consideration.