Commissioner of Income Tax vs Birla Bros. (P.) Ltd.

Banerjee, J.—The Tribunal referred the following questions of law u/s 256(1) of the income tax Act, 1961 (''the Act'') to this Court :

R.A. No. 823 (Cal.) of 1985 (Assessment year 1976-77):

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the disallowance made u/s 40(c) of the income tax Act, 1961 in respect of medical expenses reimbursed to assessee''s managing director ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the entire initial contribution to the approved superannuation fund in the year of the contribution ?

R.A. No. 824 (Cal.) of 1985 (Assessment year 1977-78):

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the disallowance made u/s 40(c) of the income tax Act, 1961 in respect of medical expenses reimbursed to assessee''s managing director ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the entire initial contribution to the approved superannuation fund in the year of contribution ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that relief u/s 35B of the income tax Act, 1961 was allowable on payments made to Orient Paper Mills Ltd. for rendering technical services to Nigerian Paper Mills Ltd. as per agreement dated 15-7-1974 between the assessee-company and Orient Paper Mills Ltd.

R.A. No. 825 (Cal.) of 1985 (Assessment year 1978-79):

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the disallowance made u/s 40(c) of the income tax Act, 1961 in respect of medical expenses reimbursement to assessee''s managing director ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the relief u/s 35B of the income tax Act, 1961 was allowable on payments made to Orient Paper Mills Ltd. for rendering technical services to Nigerian Paper Mills Ltd. as per agreement dated 15-7-1974 between the assessee-company and Orient Paper Mills Ltd. ?

R.A. No. 826 (Cal.) of 1985 (Assessment year 1979-80):

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the disallowance made u/s 40(c) of the income tax Act, 1961 in respect of medical expenses reimbursement to assessee''s managing director ?

In respect of the assessment years 1976-77 to 1979-80 question No. 1 is concluded by a decision of this Court in the case of Commissioner of Income Tax Vs. Kanan Devan Hills Produce Company Ltd., as well as a decision of this Court in the case of Indian Leaf Tobacco Development Co. Ltd. Vs. Commissioner of Income Tax, . Following the said decisions question No. 1 for the assessment years 1976-77 to 1979-80 is answered in the affirmative and in favour of the assessee.

In respect of the assessment years 1976-77 and 1977-78 question No. 2 is now concluded by a decision of this Court in the case of Mathew & Platt (I) Ltd. v. CIT [IT Reference No. 186 of 1983, dated 6-2-1990]. Following the said decision question No. 2 for the assessment years 1976-77 and 1977-78 is answered in the affirmative and in favour of the assessee.

In respect of the assessment years 1977-78 and 1978-79, respectively, regarding question No. 3 and question No. 2 the finding of the Tribunal is as follows :

Ground No. 2 in IT Appeal Nos. 2324 and 2325 (Gal.) of 1983 relates to the assessee''s claim for weighted deduction u/s 35B(1)(b)(viii) of the Act on payments made to Orient Paper Mills for rendering technical services to Nigerian Paper Mills under the memorandum of arrangement dated 15-7-1974 between the assessee-company and Orient Paper Mills Ltd. The income tax Officer declined to accept the assessee''s claim u/s 35B(1)(b)(viii) of the Act. But he did not give any intelligible reason for such rejection. It seems that he was under the impression that the expenses made by the assessee through the agent do not qualify for the claim. But we do not find any such restriction in the language or spirit of the section itself. It was not disputed by the income tax Officer that the expenses were made for performance of service outside India. In such circumstances we agree with the Commissioner (Appeals) that the assessee-company was entitled to weighted deduction as claimed.

In view of such clear findings of the Tribunal such expenditure clearly conies within the purview of sub-clause (viii) to section 35B(1)(b) of the Act. The said expenditure was incurred wholly and exclusively for the purpose mentioned in the section itself. In that view of the matter question No. 2 (assessment year 1978-79) and question No. 3 (assessment year 1977-78) are both answered in the affirmative and in favour of the assessee. Mr. A.C. Moitra. the learned advocate appearing for the revenue, made an oral application for grant of certificate of fitness for appeal to the Supreme Court in respect of question No. 1 in respect of all the assessment years. Since such certificate was already granted by this Court in other matters u/s 261 of the Act we, accordingly grant such certificate in this matter also certifying that it is a fit case for appeal to the Supreme Court and, therefore, leave is granted. Let a certificate of fitness for appeal to the Supreme Court u/s 261 regarding question No. 1 be issued and drawn up expeditiously. There will be no order as to costs.

Sen, J.

I agree.