Harrisons Malayalam Ltd. (No. 1) vs Commissioner of Income Tax

K.S. Paripoornan, J.—In this batch of original petitions filed by two assessees, u/s 256(2) of the Income Tax Act, the question that arises for consideration is whether the Appellate Tribunal was justified in holding that the expenditure incurred by the assessees and the depreciation allowance therefore should be treated as perquisite in the computation of disallowance u/s 40A(5) of the Income Tax Act. In the first three Original Petitions Nos. 4532, 4534 and 4535 of 1989, the petitioner is the same assessee. The assessee in Original Petition No. 6030 of 1987 is different. The Income Tax Officer, while finalising the assessments, made disallowances u/s 40A(5) of the Act, in respect of the expenditure incurred by the assessee on the maintenance of buildings and the depreciation therefor, which were given for the residence of the employees. Similar disallowances were made in respect of education allowance, servants'' allowance and leave travel concession given to the employees. The legality of such disallowances was sustained by the Appellate Tribunal. The sole question that arises for consideration is whether the Tribunal was justified in holding that the disallowances made u/s 40A(5) of the Act were justified.

We heard counsel. It is agreed that the disallowance made by the Income Tax Officer in exercise of the powers u/s 40A(5) of the Act is in accord with the Full Bench decision of this court in Commissioner of Income Tax Vs. Forbes, Ewart and Figgis (P.) Ltd. and Harrison and Crossfield Ltd., . Counsel for the assessees contended that the Honourable Supreme Court of India has granted leave to appeal against the judgment of this court, in Commissioner of Income Tax Vs. Forbes, Ewart and Figgis (P.) Ltd. and Harrison and Crossfield Ltd., , and so this court may be pleased to allow these petitions and direct the Appellate Tribunal to refer the questions of law formulated in the original petitions for the decision of this court.

We are unable to accept the above plea of counsel for the petitioners. The decision of the Tribunal is in accordance with the decision of the Full Bench of this court, vide Commissioner of Income Tax Vs. Forbes, Ewart and Figgis (P.) Ltd. and Harrison and Crossfield Ltd., . It was not brought to our notice that any other court has taken a different view of the law. In such circumstances, we hold that the question of law formulated in this batch of four original petitions is not a referable question of law. We are satisfied that the decision of the Appellate Tribunal is correct. Therefore, we reject the above four original petitions and decline to direct the Income Tax Appellate Tribunal to refer the question of law stated in the original petitions.