COMMISSIONER OF INCOME TAX Vs. MERCANTILE BANK LIMITED

JUDGEMENT

(1.) WE are concerned, in this reference under S. 256(1) of the IT Act, 1961 made at the instance of the Revenue, with the asst. yrs. 1969_7 and 1970 71. The three questions referred read thus.

(2.) THE first two questions can be considered together. Their phraseology indicates the relevant facts. The issue involved therein is covered by the decision of this Court in CIT vs. Indokem (P) Ltd. (1981) 22 CTR (Bom) 268 : (1981) 132 ITR 125 (Bom).

(3.) THE relevant provision is S. 40(a)(v) as it then read, and it refers to any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite, whether convertible into money or not, to an employee........" This Court in the case of Indokem (P) Ltd. (supra) following the judgment of the Calcutta High Court in CIT West, Bengal II vs. Kanan Devan Hills Produce Co. Ltd. (1979) ITR 431 (Cal) and of the Madras High Court in CIT, Tamil Nadu vs. Manjushree Plannation Ltd. (1980) 18 CTR (Mad) 70 : (1980) 125 ITR 150 (Mad), held that a cash payment to an employee fell outside the scope of the provision.