T.V. Sundaram Iyengar and Sons Ltd. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—The assessee has petitioned the court to call for the reference of four questions which have been proposed by the

assessee. The assessment year is 1987-88. The first question proposed by the assessee concerns the correctness of the order of the Tribunal in

adopting the annual value as noted in the municipal register as the annual value of the property owned by the assessee. The annual value in the

municipal register is really of no material relevance for determining the annual value ; for the purposes in case of buildings situated in cities and in

other areas where the rent control legislation is in force, it is only the determination made in accordance with the provisions of the rent control law

that is to be regarded as the amount that the landlord can reasonably expect to receive from the tenant of the building owned by him. The assessee

did not further any valuation (sic). The Tribunal was not bound to accept the entry in the municipal register as representing the amount which the

assessee could reasonably be expected to receive from the lessee of the building owned by it. Moreover, the Tribunal has found that the assessee

had let out the property with a total area of 23,200 sq. ft. for a sum of Rs. 1,250 per month the tenant being an associate company of the assessee.

The Tribunal has held that prima facie that rate of rental cannot be considered as rent for which the properties are reasonably expected to be let.

We, therefore, find no illegality whatsoever, in the order of the Tribunal in remanding the matter for the purpose of proper determination of the

amount of rent that can be reasonably received in respect of the property. Though the actual rent will normally be regarded as reasonable rent, in

this case, there are special facts, i.e., the large area of the building, the fact that the tenant is the associate company and the further fact that the

amount of rent is on the face of it, very low.

The second question proposed by the assessee is regarding the confirmation by the Tribunal of the disallowance of Rs. 94,708 in respect of

presentation articles. The Tribunal has found that no details regarding those articles have been furnished and in the absence of evidence, Rule 6B of

the Income Tax Rules, 1962, was prima facie attracted and had been rightly applied by the Income Tax Officer. Even before the Tribunal, the

articles were described by the assessee as presentation articles, though it was further contended that the articles were given for the purpose of

obtaining certain pre-determined level of turnover in the off-take of the company''s products. That the article did not contain any advertisement was

not the case of the assessee. We, therefore, see no error in the order of the Tribunal confirming the disallowance.

The next question proposed by the assessee is regarding disallowance of another sum of Rs. 94,309 as ""other trade expenses"". These amounts

are, according to the assessee, donations made to various religious and public institutions. The Tribunal found that the details of these donations

had not been submitted before the Tribunal. The details had been submitted before the Income Tax Officer, who after examining the same held that

the expense to that extent could not be regarded as expenditure for the purpose of business. The Commissioner of Income Tax has confirmed the

order of the Assessing Officer. The Tribunal held that in the absence of the details, it will not interfere. It was for the assessee to give the details if it

wanted to demonstrate that the Income Tax Officer and the Commissioner were incorrect in not allowing those sums.

The last question that was proposed is whether the Tribunal was justified in law in refusing to entertain the additional grounds in respect of the

claim for deduction of the investment deposit account u/s 32AB of the Income Tax Act. The Tribunal found that no such claim had been made

before the Income Tax Officer and therefore the request for raising the additional ground was to be rejected. Though it was open to the Tribunal to

reject or allow additional grounds to be raised in its discretion, that discretion having been exercised against the assessee, we cannot regard that

fact alone as sufficient to call for a reference. The allowing or disallowing of additional grounds was a matter of sound discretion of the Tribunal. If

the Tribunal had allowed raising of additional grounds in favour of the assessee, we would have declined to interfere with such an order. Refusal to

entertain the additional grounds also has to be treated in a similar manner. We decline to interfere with the exercise of discretion.

In the result, none of the questions proposed for reference can be properly regarded as questions of law requiring the decision of this court.

Therefore, the tax case petition is dismissed.