LUBRIZOL INDIA LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE reference is at the instance of the assessee company. The proceedings relate to the asst. yr. 1981 82. The Tribunal has referred to this Court three questions of law under S. 256(1) of the IT

(2.) IT is common ground that the expenditure incurred herein amounted to Rs. 11,960 (Rs. 5,500 on the repairs of the flats owned and Rs. 6,400 on the flats taken by the assessee on lease). These flats are admittedly used by the assessee's employees for residence. The AO rejected the assessee's claim that the provisions of S. 40A(5) were not attracted and considered the abovesaid amount for the purpose of disallowance under that section. The CIT (A) agreed with the AO and the Tribunal confirmed the order of the CIT(A) following the Special Bench order of the Tribunal in the case of Kodak Ltd. (1986) 18 ITD 213.

(3.) SHRI Jetley, learned counsel for the Revenue, on the other hand, stated that sub cl. (ii) of cl. (a) of S. 40A(5) had two parts and that it was the second part which was attracted. The second part of the clause, it was submitted, refers to the factual state of affairs and does not require the expenditure incurred by an assessee to result in any perquisite to the employees.