LUBRIZOL INDIA LTD Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE reference is at the instance of the assessee company. The proceedings relate to the assessment year 1981-82. The Tribunal has referred to this court three questions of law under section 256 (1) of the Income-tax Act, 1961. The questions are :

(2.) IT may, at the outset, be mentioned that question No. (i) as framed by the Tribunal requires reframing, inasmuch as it does not bring out the real controversy between the parties, the controversy is whether the expenditure incurred on repairs of the flats owned by the assessee or taken on lease which are used for the residence of its employees is to be considered for disallowance under section 40a (5) of the Income-tax Act, 1961. It is not really material whether such an expenditure amounts to a perquisite in the hands of the employees, in the circumstances, question No. (i) is reframed as under :

(3.) 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 Assessing Officer rejected the assessee's claim that the provisions of section 40a (5) were not attracted and considered the abovesaid amount for the purpose of disallowance under that section. The commissioner (Appeals) agreed with the Assessing Officer and the Tribunal confirmed the order of the Commissioner (Appeals) following the Special Bench order of the Tribunal in the case of kodak Ltd. [1986] 18 ITD 213.