International Instruments Pvt. Ltd. vs Commissioner of Income Tax

S.R. Rajasekhara Murthy, J.—The following two questions have been referred for the opinion of this court by the Income Tax Appellate Tribunal, Bangalore Bench, u/s 256(1) of the Income Tax Act, 1961 :

"1. Whether, on the facts and in the circumstances of the case, the disallowance u/s 40A(5) of the Income Tax Act, 1961, of Rs. 12,000 out of remuneration paid to ''managing director'' and Rs. 14,492 out of remuneration paid to director was right in law ?

Whether, on the facts and in the circumstances of the case, the interest paid under sections 217(1A) and 220(2) of the Act was allowable as a deduction ?"

As far as question No. 1 is concerned, that question is covered by the decision in this court in International Instruments (P.) Ltd. Vs. Commissioner of Income Tax, Karnataka, wherein a similar question has been answered in favour of the assessee. Following the said decision, we answer this question also in the negative and in favour of the assessee.

As far as question No. 2 is concerned, that question is covered by the decision of this court in the case of the same assessee in I.T.R.C. Nos. 109 and 110 of 1979 disposed of on September 14, 1983 Commissioner of Income Tax, Karnataka Vs. International Instruments (P) Ltd., . Accordingly, this question is answered in the negative and in favour of the Department.