COMMISSIONER OF INCOME TAX Vs. AOROW INDIA LIMITED

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961, at the instance of the Revenue, the Tribunal has referred the following question of law to this Court for opinion :

(2.) THE assessee is a limited company. This reference pertains to asst. year 1983 84, the relevant previous year being the year ended on 30th June, 1982. In its assessment for the above assessment year, the assessee incurred certain expenditure in connection with travelling by its employees including hotel expenses and allowances. The ITO computed the disallowance out of such expenditure under S. 37(3) of the IT Act, 1961 ("Act") and r. 6D of the IT Rules, 1962 ("Rules"), at Rs. 22,895. While computing the amount of disallowance under S. 37(3) and r. 6D, the ITO took into account the total expenditure incurred by each employee in each trip undertaken by him. The assessee was aggrieved by the method of computation adopted by the ITO as, according to it, he should have computed the amount allowable as deduction under S. 37(3) r/w r. 6D by multiplying the per day rates specified in r. 6D with the total number of days spent during the year in travelling. The assessee, therefore, appealed to the CIT(A). The case of the assessee before the CIT(A) was that the disallowance under r. 6D should be worked out by taking into consideration all the trips undertaken by the employee during the year together and not on the basis of each trip. The CIT accepted this contention of the assessee and directed the ITO to recompute the disallowance accordingly. The appeal of the Revenue against the above order having been dismissed by the Tribunal, the Revenue is before us for our opinion with this reference from the Tribunal under S. 256(1) of the Act.

(3.) THE figures Rs. 80 and Rs. 40 appearing in items (i) and (ii) of cl. (b) of sub r. (2) of r. 6D were substituted by Rs. 100 and Rs. 50 by the Income tax (Fifth Amendment) Rules, 1975, and by Rs. 150 and Rs. 75 respectively by the Income tax (Fourth Amendment) Rules, 1980, w.e.f. 18th June, 1980. The word "fifty" in the proviso was also substituted by for the words "thirty three and one third" by the Income tax (Fourth Amendment) Rules, 1980, w.e.f. 18th June, 1980. Clause (b) was later substituted by the Income tax (Fifth Amendment) Rules, 1992 w.e.f. 1st April, 1992, by the following: