OIL INDIA LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1969-70, the following questions of law have been referred to this court:

(2.) The facts shortly stated are that while making the assessment of the assessee for the said year on March 15, 1972, the Income-tax Officer disallowed Rs. 9,48,380 under Section 40(a)(v) of the Act and on the basis of the claim made by the assessee allowed the deduction. In computing its income from business for that year, the sum of Rs. 1,40,411 being 1/12th of the expenditure on repairs, maintenance, etc., of bungalows and depreciation on bungalows, furniture, etc., owned by the assessee-company and used by its employees was allowed as a deduction. Later on, the Income-tax Officer was of the opinion that the deduction of the sum of Rs. 1,40,411 allowed to the assessee represented a mistake apparent on the record, inasmuch as the said deduction was not permissible under the provisions of Section 40 (a) (v) of the Act. He, accordingly, issued a show-cause notice to the assessee as to why the said mistake be not rectified. After cause was shown and the objections raised by the assessee were considered, the Income-tax Officer deleted the deduction of Rs. 1,40,411 allowed to the assessee at the time of the original assessment.

(3.) Aggrieved by the said order of the Income-tax Officer, the assessee brought the matter by way of appeal before the Appellate Assistant Commissioner of Income-tax (Central-II), Calcutta, who confirmed the said order of the Income-tax Officer under Section 154 of the Act.