COMMISSIONER OF INCOME TAX Vs. BHARAT INDUSTRIAL WORKS

JUDGEMENT

(1.) THIS is a reference at the instance of the Revenue under Section 256(1) of the Income-tax Act, 1961. The following question of law has been referred by the Tribunal for answer by this court :

(2.) THE brief facts giving rise to this reference are that the assessee-firm declared its total income at Rs. 4,18,030. THE business of the assessee was manufacture and sale of spare parts required in steel plants and other industries and also execution of the work of fabrication of steel structures and power equipments. During the course of assessment, the Assessing Officer found that an amount of Rs. 1,41,580 was incurred by the assessee on maintenance of cars. He included this amount while computing the disallowable expenses under Section 37(3A) since, according to the provisions of Section 37(3B)(ii), expenses on running and maintenance of motor cars had to be included.

(3.) SECTIONS 37(3A) and 37(3B) as they stood at the relevant time are reproduced as under :