Commissioner Of Income Tax vs Associated Traders & Engineering ...
1987 Latest Caselaw 237 Del

JUDGMENT

S. S. Chadha, J. - This petition under s. 256(2) of the IT Act, 1961 prays for a direction to the ITAT for referring the following questions of law to this Court :

(a) arising out of order No. ITA-1585 :

1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in reducing the disallowance from Rs. 40,000 to Rs. 30,000 thereby allowing a relief of Rs. 10,000 under the head "Business Promotion Expenses" ?

2. Whether, on the facts and in the circumstances of the case the Tribunal is correct in law in giving the relief of Rs. 9,233 out of staff welfare expenses by holding that the same was entertainment expenditure incurred on staff ignoring the finding in the order of the CIT (Appeals) that the same was of entertainment nature and not for staff welfare, as admitted by the assessed ?

3. Whether, on the facts and in the circumstances of the case the Tribunal is justified in law in deleting the disallowance of Rs. 79,687 out of gratuity disallowed by the ITO ?

(b) arising out of ITA-1426-27 :

"Whether, on the facts and in the circumstances of the case the Tribunal is correct in law in holding that the guarantee commission of Rs. 60,000 paid by the assessed company to its Director during this year is an admissible revenue expenditure ?"

2. So far as the questions 1 and 2 are concerned, this Court has already directed the Tribunal to state the case and refer similar questions of law in I.T.C. No. 30/83 decided on 27-11-1986 and I.T.C. 60-61/84 decided on 25-3-1987.

3. So far as the third question is concerned, this Court has directed in I.T.C. 196/76 for the asst. yr. 1964-65 by order dt. 24-4-1986, the Tribunal to state a case and refer similar question for the earlier year.

4. So far as the question arising out of ITA 1426-27 is concerned the Tribunal has found as a fact that the guarantee commission was paid to the Directors in view of personal risks they undertook in furnishing guarantee of behalf of the assessed. The payment of commission was allowable on the basis of a finding of fact. Similar question has been disallowed by this Court particularly in I.T.C. No. 170 of 1979 decided on 1-9-1981.

5. Accordingly the question is partly allowed. We direct the Tribunal to draw up a statement of and refer questions 1, 2 and 3 arising out of ITA for the opinion of this Court. The statement of case should be drawn in the light of the decision of the Supreme Court in Shree Sajjan Mills Ltd. v. CIT, M.P. and Anr. (1985) 156 ITR 585 (SC) as regards question No. 3.