Weighted deduction, personal-use car expenses, and office-shifting costs were each treated differently under business income rules.

Bank charges paid in India were held ineligible for weighted deduction under section 35B, so the Revenue's disallowance was upheld. Expenditure on company cars used by employees and directors for personal purposes was also disallowable under the restrictions on perquisites and personal expenditure, again supporting the Revenue. By contrast, expenditure incurred in shifting the administrative office from Madurai to Bangalore on amalgamation was treated as revenue expenditure allowable in computing business income, so the assessee succeeded on that issue.

---

---

Issues: (i) Whether weighted deduction under section 35B was allowable in respect of bank charges paid in India; (ii) Whether disallowance under sections 40A(5) and 40(c) was justified in respect of expenditure on company cars used by employees and directors for personal purposes; (iii) Whether expenditure incurred in shifting the administrative office from Madurai to Bangalore on amalgamation was allowable as revenue expenditure.

Issue (i): Whether weighted deduction under section 35B was allowable in respect of bank charges paid in India.

Analysis: The issue was treated as covered by the binding Full Bench decision holding that bank charges paid in India do not qualify for weighted deduction under section 35B.

Conclusion: The claim for weighted deduction was disallowed and the issue was decided in favour of the Revenue.

Issue (ii): Whether disallowance under sections 40A(5) and 40(c) was justified in respect of expenditure on company cars used by employees and directors for personal purposes.

Analysis: The expenditure was found to have been incurred for personal use of the company cars by employees and directors, and such expenditure attracted disallowance under the applicable restriction on perquisites and personal expenditure.

Conclusion: The disallowance was upheld and the issue was decided in favour of the Revenue.

Issue (iii): Whether expenditure incurred in shifting the administrative office from Madurai to Bangalore on amalgamation was allowable as revenue expenditure.

Analysis: The issue was covered by the assessee's own earlier decision holding that expenditure on shifting offices from Madurai to Bangalore constituted revenue expenditure allowable in computing business income.

Conclusion: The expenditure was held allowable as revenue expenditure and the issue was decided in favour of the assessee.

Final Conclusion: The reference was answered by upholding the Revenue's case on the first two questions and the assessee's case on the third question, with no order as to costs.

Ratio Decidendi: Bank charges paid in India are not eligible for weighted deduction under section 35B, expenditure on company cars used for personal purposes is disallowable, and expenditure incurred for shifting an office in the course of business reorganisation can be revenue in nature.

---