Punjab-Haryana High Court
The Commissioner Of Income Tax vs M/S Porritts Spencer (Asia) Limited on 21 November, 2008
Author: Adarsh Kumar Goel
Bench: Adarsh Kumar Goel, L.N.Mittal
ITR Nos. 2 and 3 of 1984 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH.
ITR Nos. 2 and 3 of 1984
Date of decision: 21.11.2008
The Commissioner of Income Tax, Haryana, Rohtak
-----Applicant
Vs.
M/s Porritts Spencer (Asia) Limited, Faridabad
-----Respondent
CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE L.N.MITTAL Present: Mr. Yogesh Putney, Sr.Standing Counsel for the revenue.
Mr. Santosh Aggarwal, Advocate With Mr.Avinash Chander Jain, Advocate for the assessee.
Adarsh Kumar Goel, J
1. The Income Tax Appellate Tribunal Delhi Bench 'C' Delhi, has referred the following substantial questions of law for opinion of this Court, arising out of its order dated 23.10.1982 in ITA Nos.928/Del/79 and 944/Del/79, for the assessment year 1976-77, at the instance of the revenue:-
ITR No.2 of 1984
"1) Whether on the facts and in the circumstances of the case, the expenditure of Rs.19186/- incurred on the maintenance of the accommodation provided to ITR Nos.2 and 3 of 1984 2 Mr.N.Nath, Rs.24,446/- by way of reimbursement of the medical expenses and Rs.13,560/- out of servant's wages constitute "perquisite" for computation of the disallowance under section 40A(5) of the IT Act, 1961?
2) Whether on the facts and in the circumstances of the case the disallowance on account of perquisite the value of car provided by the assessee to the director employee Mr. N.Nath should be computed in accordance with Rule 3 of the Income Tax Rules, 1962?
3) Whether on the facts and in the circumstances of the case, the rent of the garage and servant quarters constitute 'perquisite' for the purpose of working out the disallowance under section 40A(5) of the Act?
4) Whether on the facts and in the circumstances of the case, the disallowance under Rule 6 D of the IT Rules should be worked out by making the computation according to the aggregate expenditure incurred by each and every employee during the year and not on the basis of per trip?
5) Whether on the facts and in the circumstances of the case, the provisions of Rule 6D of the IT Rules, 1962 are applicable in respect of the stay of Mr. H.Ingham?ITR Nos.2 and 3 of 1984 3 ITR No.3 of 1984
"1) Whether on the facts and in the circumstances of the case, the amount of Rs.20,027/- and Rs.3600/-
respectively representing proportionate expenses for personal use of car and garage rent should be treated as perquisite for the purpose of working out the disallowance under section 40A(5) of the Income tax Act in the case of Shri K.C.Tapedar, an employee of the company?
2. Whether on the facts and in the circumstances of the case, the sum of Rs.9,397/- reimbursed to the employee as house rent allowance should be treated as perquisite for the purpose of disallowance under section 40A(5) of the Act?
3) Whether on the facts and in the circumstances of the case, the assessee was entitled to the depreciation on the technical know how capitalized by the assessee company?
2. The assessee is a company incorporated under the Companies Act, 1956. The assessee, inter-alia, made following claims during the assessment year in question:-
(i) Deduction of expenditure incurred on the maintenance of accommodation provided to Shri N.Nath, one of the directors. Medical ITR Nos.2 and 3 of 1984 4 reimbursement and servant's wages to different employees.
(ii) Perquisite value of car provided to Shri N.Nath.
(iii) Rent of garage and servant quarter.
(iv) Travelling expenditure.
(v) Expenditure on stay of Shri H.Ingham.
(vi) Expenses on personal use of car and garage rent.
(vii) Amounts spent on use of car. The assessee
claimed that the entire amount spent on car was for its business and so was the garage rent.
(viii) Reimbursement of house rent allowance to the extent of Rs.9397/-.
(ix) Depreciation on technical know how.
3. The Assessing Officer rejected the claims of the assessee and added back Rs.19186/- towards maintenance of accommodation provided to Shri N.Nath; Rs.24446/- towards reimbursement of medical expenses; Rs.13560/- towards servants' wages, which were held to constitute perquisite for computing disallowance under section 40A(5) of the Act; perquisite value of car provided to Shri N.Nath was held to be disallowable; rent of garage and servant quarter were held to constitute perquisite for disallowance under section 40A(5); expenditure incurred on traveling was held to be disallowable under Rule 6D by making computation according to aggregate expenditure incurred; Rule 6D was held to be applicable in respect of expenditure ITR Nos.2 and 3 of 1984 5 on stay of Shri H.Ingham; proportionate expenses on personal use of car and garage rent attributable to personal use was directed to be worked out towards disallowance under section 40A(5); amount reimbursed towards HRA being Rs.9397/- was treated as perquisite under section 40A(5) and claim for depreciation on technical know capitalized by the assessee was disallowed.
4. The CIT(A) partly allowed the claims of the assessee, which gave rise to ITA No.928/Del/83 (79), at the instance of the revenue (it is pointed out that 1983 is a mistake in the printed paper book) and ITA No.944/Del/79 at the instance of the assessee.
5. The Tribunal accepted the appeal of the assessee and rejected the appeal of the revenue.
6. We have heard learned counsel for the parties and perused the record.
7. Learned counsel for the parties state that all the questions referred are already covered by earlier judgments of the Hon'ble Supreme Court or of this Court.
8. We proceed to dispose of the questions referred as under:- ITR No.2 of 1994
Re:Q.No.1
9. It has not been disputed by the learned counsel for the parties that the question of expenditure on maintenance of ITR Nos.2 and 3 of 1984 6 accommodation provided to Shri N.Nath is covered in favour of the revenue by judgment of this Court in CIT v. Porritts & Spencer (Asia) Limited, 255 ITR 189. Following the said judgment, we decide this part of the question in favour of the revenue and against the assessee.
It is further undisputed that question with regard to claim for medical reimbursement stands covered in favour of the assessee by the judgment of the Hon'ble Supreme Court in CIT v. Mafatlal Gangabhai & Co.(P) Limited, 219 ITR 644. Accordingly, this part of the question is decided against the revenue and in favour of the assessee.
It is undisputed that question with regard to wages of servants is covered in favour of the revenue by judgment of the Hon'ble Supreme Court in CIT v. British Bank of Middle East, 251 ITR 217 and judgment of this Court in Porritts & spencer (Asia) Limited (supra). Accordingly, this part of the question will stand answered in favour of the revenue and against the assessee. Re.Q.No.2
10. It has not been disputed that the question is covered against the assessee by judgment of the Hon'ble Supreme Court in British bank of Middle East (supra). Accordingly, this question will stand answered in favour of the revenue and against the assessee. ITR Nos.2 and 3 of 1984 7 Re.Q.No.3
11. It is undisputed that this question is covered in favour of the assessee by judgment of this Court dated 16.9.2008 in ITR Nos.80-82 of 1982 (Porritts & Spencer (Asia) Limited v. The Commissioner of Income tax, Haryana). Accordingly, this question will stand answered in favour of the assessee and against the revenue.
Re.Q.No.4
12. It is not disputed that this question is covered against the assessee by judgment of this Court in CIT v. Porritts & Spencer (Asia) Limited, 241 ITR 126. Accordingly, this question is answered in favour of the revenue and against the assessee. Re.Q.No.5
13. It is not disputed that this question is covered against the assessee by judgment of this Court dated 16.9.2008 in ITR Nos.80 to 82 of 1982 in the case of the assessee itself. Accordingly, this question will stand answered against the assessee and in favour of the revenue.
ITR No.3 of 1984 Re.Q.No.1
14. It is not disputed that identical question has been answered in favour of the assessee in judgment of this Court dated ITR Nos.2 and 3 of 1984 8 16.9.2008 in the case of the assessee itself in ITR Nos.80 to 82 of 1982. Accordingly, this question will stand answered against the revenue and in favour of the assessee.
Re.Q.No.2
15. It is not disputed that identical question was answered in favour of the assessee in judgment of the Hon'ble Supreme Court in Mafatlal (supra) and Sukhjit Starch & Chemicals Limtied v. CIT, 221 ITR 308. Accordingly, this question will stand answered against the revenue and in favour of the assessee. Re.Q.No.3
16. It is not disputed that identical question has been answered in favour of the assessee in judgment of this Court in Porritts & Specer (Asia) Limited v. CIT, 180 ITR 211. Accordingly, this question will stand answered against the revenue and in favour of the assessee.
17. The references are disposed of accordingly.
(Adarsh Kumar Goel)
Judge
November 21, 2008 (L.N.Mittal)
'gs' Judge