CIT Vs. RAMPUR DISTILLERY & CHEMICALS CO. LTD

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, New Delhi, has referred the following two questions of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), for opinion to this court: '1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the assessee's claim for investment allowance on the ground that the products manufactured by the assessee was not hit by item 1 of the Eleventh Schedule to the Income Tax Act ?

(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal was right in law to hold that the cash allowance and reimbursement paid to the employees does not amount to perquisites within the meaning of section 40A(5) ?' 2. The reference relates to the assessment year 1984 -85.

(3.) THE assessing officer had disallowed the sum of Rs. 24,362 by invoking the provisions of section 46A(5) of the Act, which represented cash payments of three of its employees. Feeling aggrieved, the respondent preferred the appeal before the Commissioner (Appeals) who has allowed the claim of investment allowance and also deleted the disallowance made under section 40A(5) of the Act. The Commissioner (Appeals) has held that the respondent's production of industrial alcohol was 86.3 per cent and that of IMFL and country liquor was only 13.7 per cent. He further held that the cash reimbursement paid to the employees does not amount to perquisites. The revenue feeling aggrieved preferred an appeal before the Tribunal. However, the Tribunal has upheld the order passed by the Commissioner (Appeals) and rejected the appeal filed by the revenue on these two issues.