1989 (7) TMI 3

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....ncome-tax Act, 1961, for the assessment year 1977-78, the following question of law has been referred to this court "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting Rs. 43,700 added by the Income-tax Officer under section 40A(5) of the Income-tax Act, 1961, on the sale of the assessee-company's motor cars to its employees at concessional rate ?....

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....Act was not permissible under the Act as there was no expenditure incurred in the said case during the relevant year. In other words, the company did not incur any expenditure, directly or indirectly, in Providing any perquisite to the employees. The Tribunal also upheld the decision of the, Commissioner of Income-tax (Appeals). Section 40A(5) of the Act applies only in a case where the asse....

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.... motor cars were purchased not in the relevant accounting year but in the earlier years between 1967 and 1971. Hence, the essential condition for the application of section 40A(5) of the Act is not satisfied in the present case. Reference may, in this connection, be made to the decision of the Madras High Court in CIT v. A. K. Subbaraya Chetty and Sons [1980] 123 ITR 592. In that case, the asse....

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....rice and not paid out or away from the sale price or the income that had accrued to it, there was no " expenditure " which could be disallowed under section 40A(2)(a) of the Act. In other words, when the assessee was charging the price after allowing the discount of six per cent., the allowance of discount of six per cent. did not constitute an expenditure and, hence, section 40A(2)(a) of the Act ....