Delhi High Court
Commissioner Of Income-Tax, ... vs Electric Construction And Equipment ... on 14 March, 1989
Equivalent citations: [1990]185ITR147(DELHI)
JUDGMENT Leila Seth, J.
1. By this application under section 256(2) of the Income-tax Act, 1961, (hereinafter called "the Act"), the Commissioner of Income-tax prays that we direct the Tribunal to draw up a statement of case and refer the following question of law for the opinion of this court.
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in allowing the expenses of Rs. 15,000 representing the tour expenses of Sh. P D Gupta and also deduction under section 35B thereon by ignoring the material fact that the expenditure was not connected with the business activity of the assessed-company ?"
2. The relevant assessment year is 1974-75. The Income-tax Officer did not allow the sum of Rs. 15,000 as expenditure as he held that details had not been furnished. This is despite the fact that a voucher signed by Mr. P. D. Gupta was filed before the assessed authorities and the assessed had submitted that the said sum of Rs. 15,000 had been advanced to Mr. P. D. Gupta of Industrial Electronics, Bombay, for expenditure in connection with export promotion.
3. The Commissioner of Income-tax (Appeals) affirmed the order of Income-tax Officer.
4. On further appeal by the assessed, the Tribunal was of the view, after perusing the abovementioned voucher, that where a limited company has a turnover of a few crores of rupees and the assessed income amounts to more than Rs. 50,00,000, payment made by the assessed to Industrial Electronics, Bombay, as part of the tour expenses of Mr. P. D. Gupta, could not be doubted as being incidental to the business of the assessed, particularly, as there was no material on record to show that the said Industrial Electronics, Bombay, was connected with either the senior executives or the directors of the assessed-company, and/or that the payment was made for any extraneous consideration; further, there was no material to impute any motives to Mr. P. D. Gupta and/or the assessed-company relating to this claim. As such, the Tribunal allowed this amount as revenue expenditure being incidental to the assessed's business.
5. The Tribunal thus held that since this amount of Rs. 15,000 has been allowed as revenue expenditure, weighted deduction under section 35B of the Income-tax Act, 1961, should also be allowed. It noticed that the Income-tax Officer had allowed 50 per cent. of the expenses on Mr. P. D. Gupta's foreign tour and that it was the same Mr. P. D. Gupta who had incurred the expenditure of Rs. 15,000. Consequently, it directed the Assessing Officer to allow weighted deduction on this amount of Rs. 15,000.
6. The Commissioner of Income-tax then filed an application under section 256(1) of the Act which was rejected by the Tribunal as it noticed that the finding of the Tribunal was a finding of fact based on material on record.
7. Learned counsel for the Revenue contended that the onus of establishing a case for weighted deduction under section 35B of the Act is on the assessed and this onus has not been discharged.
8. We are of the view that the Tribunal has dealt with this matter and has come to a finding regarding the expenditure incurred, on the export promotion tour of Mr. P D Gupta, being connected with the business activities of the assessed on a perusal of the voucher that had been filed before the assessing authorities, and also on the fact that a part of the tour expenses of Mr. P. D. Gupta had been allowed by the Income-tax Officer.
9. This finding of the fact is based on material on record and no question of law arises. Consequently, we dismiss the application. However, in the circumstances of the case, we make no order as to costs.