Commissioner Of Income-Tax vs Usha International Ltd.
1990 Latest Caselaw 511 Del

JUDGMENT

B.N. Kirpal, J.

1. The petitioner is seeking reference of the following two questions to this court :

"(1) Whether the Income-tax Appellate Tribunal was correct in law in holding that 35% of the expenditure of Rs. 1,07,133 incurred on serving tea, soft drinks, lunches and dinners on occasions when both the customers and the employees were present, pertained to expenditure incurred on employees were present, pertained to expenditure incurred on employees and was not hit by Explanation 2 to section 37(2A) of the Income-tax Act, 1961 ?

(2) Whether the Income-tax Appellate Tribunal was correct in law in holding :

(a) that house rent allowance and conveyance allowance paid in cash should be treated as part of salary and not as part of perquisites ?

(b) that reimbursement of medical expenses is neither part of salary nor part of perquisites ?

2. As regards the first questions, by invoking the provisions of section 37(2A), the income-tax Officer estimated that 25% of the expenses incurred would be allowable as a deduction by virtue of Explanation 2 to section 37(2A). This was merely an estimate and, in appeal, the Commissioner of Income-tax (Appeals) increased this figure to 35%. This increased figure has been maintained by the Income-tax Appellate Tribunal. In our opinion, no question of law arises for the simple reason that, even as per the Income-tax Officer, some of the expenses of Rs. 1,07,133 would fall under Explanation 2 to section 37(2A). How much is the amount which will fall under that Explanation is a finding of fact and no question of law arises. The facts of the present case are entirely different from the facts of the earlier case. In the present case before the Income-tax Officer, the break-up of the expenses was given and, thereafter, it is a finding of fact as to how much amount would fall under Explanation 2 to section 37(2A).

3. In our opinion, question No. 2, however, is a question of law and we direct the Tribunal to state the same and refer it to this court.