NOVOPAN INDIA LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This Reference has been made by the Income Tax Appellate Tribunal, Hyderabad-A Bench, Hyderabad under Section 256 (1) of the Income Tax Act, 1961 ( for short "the Act") for the opinion of this Court on the following question of law arising out of its order dated 13.10.1995 in ITA No.687/Hyd/91 for the assessment year 1985-86 i.e. "Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, Hyderabad is correct in holding that the daily allowance paid to the employees would partake the character of hotel expenses for the purpose of disallowance under Section 37(3- A) to (3D)?".

(2.) The assessee M/s. Novopan India Limited, Hyderabad is engaged in the manufacture and sale of plain and laminated particle boards etc. For the assessment year 1985-86, it filed return declaring "nil" income on 30.9.1985.

(3.) The assessing officer, while completing the assessment under Section 143(3) of the Act, disallowed an amount of Rs.1,08,915/- representing daily allowance paid to the employees of the assessee under Section 37(3A) to (3D) on the ground that the "daily allowance" paid to the employees has to be treated similar to "payments to hotels".