COMMISSIONER OF INCOME TAX Vs. CHEMET

JUDGEMENT

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

(2.) THE facts relevant for the purposes of this reference are as under : The controversy in this case pertains to the asst. yrs. 1980 -81 and 1981 -82. The assessee -firm is engaged in the business as commission agents and brokers for chemicals and dyes. In its assessment for the asst. years 1980 -81 and 1981 -82, the assessee claimed deduction on account of miscellaneous expenses and local and other conveyance expenses from the computation of disallowance under R. 6D of the IT Rules, 1962. The ITO disallowed the same and included the local conveyance expenses and miscellaneous expenses incurred by the employees at the places visited by them. On appeal, the CIT(A) accepted the contention of the assessee and directed the ITO to take into account only the total expenses for the purpose of applying r. 6D to exclude the expenses of conveyance and miscellaneous expenses. It was directed that the ITO should obtain particulars of the salaries of the employees and the places visited by them and thereafter work out the correct disallowance. The appeal of the Revenue against the above order was rejected by the Tribunal ("the Tribunal"). Hence, this reference.

(3.) IN view of the above, we are of the clear opinion that the Tribunal was right in directing the ITO to exclude the miscellaneous expenses and local expenses from the computation of disallowance under R. 6D of the Rules. Accordingly, the question referred to us is answered in the affirmative, that is, in favour of the assessee and against the Revenue. Reference disposed of in the above terms with no order as to costs.