COMMISSIONER OF INCOME TAX Vs. MAJESTIC AUTO LTD.

JUDGEMENT

(1.) THE Tribunal, Chandigarh Bench, has referred the following question of law arising out of its order dt. 18th Sept, 1996, passed in ITA No. 1769/Chand/1990 for the asst. yr. 1984 -85 for opinion of this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 4,40,183 out of travelling expenses, Rs. 1,10,804 out of salary and Rs. 53,543 out of research and development expenses claimed by the assessee pertaining to M/s Honda Motor Cycles for which the assessee is a promoter and is a separate identity under the head of Hero Honda Ltd. and came into existence afterwards -

(2.) THE AO made additions referred to in the question, which were upheld by the CIT(A). The Tribunal, however, held the expenses to be revenue expenses having nexus to the existing business of the assessee. The relevant finding of the Tribunal is as under :

(3.) WE have heard the parties at length, have gone through the record as also the case law cited supra. On entirety of facts and circumstances of the case, we are of the view that the expenses mentioned in ground Nos. 6 to 8 are allowable as of revenue nature. We hold accordingly. Grounds thus succeed."