Ceat Tyres of India Ltd. vs Commissioner of Income Tax

Dr. B.P. Saraf, J.—This is a cross reference both at the instance of the assessee and the Revenue. Following questions have been referred by the Tribunal :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that maintenance expenses incurred by the assessee on owned flats, would be covered by the provisions of s. 40A(5)/40(c) of the IT Act, 1961 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the commission paid to a director should be included for the purpose of disallowance under s. 40(c) of the IT Act, 1961 ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that reimbursement of medical expenses should be treated as salary for the purpose of disallowance under s. 40A(5)/40(c) of the IT Act, 1961 ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that provisions of s. 40(c) of the IT Act and not that of s. 40A(5) are applicable with regard to the disallowance of remuneration in the case of the Managing Director of the company ?"

The questions have been renumbered for sake of convenience.

By consent filing of paper book is dispensed with.

Counsel for the parties are agreed that all the above questions are covered by decision of this Court and the decision of Supreme Court and they may be answered accordingly.

Having regard to the above statement we answer the questions as follows :

(a) Question No. 1 is covered by decision of this Court in the case of Lubrizol India Ltd. vs. CIT (1991) 187 ITR 25, in favour of the Revenue. Following the same we answer this question in the affirmative, i.e., in favour of the Revenue and against the assessee;

(b) Question No. 2 is covered by decision of this Court in the case of Commissioner of Income Tax Vs. Kores India Private Ltd., , in favour of the Revenue. Following the same we answer this question in the affirmative and in favour of the Revenue;

(c) Question No. 3 is covered by decision of this Court in the case of Commissioner of Income Tax, Bombay City-II Vs. Indokem Private Ltd., . Following the same it is answered in the negative and in favour of the assessee;

(d) Question No. 4 is covered by the ratio of decision of Supreme Court in Commissioner of Income Tax, Bombay Vs. M/s. Indian Engineering and Commercial Corporation Pvt. Ltd., . Having regard to the same it has to be answered in favour of the assessee. Accordingly we answer question No. 4 in favour of the assessee and against the Revenue. This reference is disposed of accordingly. No order as to costs.