Binding precedent governs perquisite disallowance and section 80J computation, producing mixed answers for assessee and Revenue.

Cash house rent allowance and reimbursement of gas and electricity expenses were treated as perquisites for disallowance under section 40A(5), following the Bombay High Court's earlier ruling in CIT v. Indokem P. Ltd.; that issue was therefore answered in favour of the assessee. Computation of deduction under section 80J had to be made in accordance with the Supreme Court's ruling in Lohia Machines Ltd. v. Union of India, so rule 19A(3) was not disregarded and that issue was decided in favour of the Revenue. The reference thus produced mixed answers, with each question resolved by binding precedent on the same statutory point.

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Issues: (i) Whether cash house rent allowance and reimbursement of gas and electricity expenses to employees were to be treated as perquisites for the purpose of disallowance under section 40A(5) of the Income-tax Act, 1961. (ii) Whether deduction under section 80J of the Income-tax Act, 1961 was to be computed on the totality of the assets of the industrial undertaking without deducting debts and liabilities, and whether rule 19A(3) of the Income-tax Rules, 1962 was to be disregarded.

Issue (i): Whether cash house rent allowance and reimbursement of gas and electricity expenses to employees were to be treated as perquisites for the purpose of disallowance under section 40A(5) of the Income-tax Act, 1961.

Analysis: The question was covered by the earlier decision of the High Court in CIT v. Indokem P. Ltd., and the parties accepted that the answer should follow that authority.

Conclusion: The issue was answered in the affirmative and in favour of the assessee.

Issue (ii): Whether deduction under section 80J of the Income-tax Act, 1961 was to be computed on the totality of the assets of the industrial undertaking without deducting debts and liabilities, and whether rule 19A(3) of the Income-tax Rules, 1962 was to be disregarded.

Analysis: The question was covered by the decision of the Supreme Court in Lohia Machines Ltd. v. Union of India, and the parties accepted that the issue had to be decided in accordance with that authority.

Conclusion: The issue was answered in favour of the Revenue and against the assessee.

Final Conclusion: The reference succeeded on the first set of questions and failed on the second set, resulting in mixed findings for the assessee and the Revenue.

Ratio Decidendi: Questions covered by binding precedent must be answered consistently with that precedent on the same statutory issue.

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