COMMISSIONER OF INCOME TAX Vs. CHLORIDE INDUSTRIES LTD

JUDGEMENT

(1.) ON an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion :

(2.) THE asses see-company has filed the return on June 27, 1990, disclosing net profit of Rs. 5,89,45,220. During the course of assessment, the Assessing Officer noticed that the company has paid travelling allowances in contravention of Rule 2B of the Income-tax Rules, 1962. THErefore, the amount of Rs. 8,873 has been disallowed in the hands of the employee. THE Assessing Officer has taken the view, when the amount of Rs. 8,873 is not exempted under Section 10(5) of the Act of 1961, this amount should not be excluded for disallowance under 1tion 40A(5) of the Act of 1961, in the hands of the assessee-company also. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has also confirmed the view taken by the Assessing Officer. In appeal before the Tribunal, the Tribunal has considered the provisions of Section 40A(5) and Rule 2B of the Income-tax Rules, 1962, and also the provisions of Section 10(5) of the Act of 1961. THE Tribunal has taken the view that the entire travel concession or assistance has to be excluded from the purview of Section 40A(5).

(3.) LEARNED counsel for the assessee, Dr. Pal, submits that Section 40A(5) refers to leave travel concession and not the limit prescribed on that under Rule 2B of the Rules, 1962.