1990 (8) TMI 54

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....ion 40A(5)(a), but also to the scheme of limits prescribed by section 40A(5)(c), and if so, whether, on the facts and in the circumstances of the case, the assessee is not entitled to deduction of the full amount of salary and perquisites amounting to Rs. 37,063 paid by it to its whole-time director ?" Income-tax Reference No. 201 of 1987 : "1. Whether the first proviso to section 40A(5)(a) of the Income tax Act, 1961, is an exception not only to section 40A(5)(a) but also to the scheme of the limits prescribed by section 40A(5)(c) and if so, whether, on the facts and in the circumstances of the case, the assessee is not entitled to deduction of the full amount of salary and perquisites totalling Rs. 59,486 paid by it to its whole-tim....

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....he instance of the assessee that the question of law formulated hereinabove, which is the subject-matter of Income-tax Reference No. 200 of 1987, has been referred for the decision of this court. Similarly, for the assessment year 1979-80, the whole-time director was paid a salary of Rs. 27,300 in addition to perquisites by way of expenditure on car, depreciation on car, value of the residential accommodation provided free, energy charges and cost of repairs and maintenance of air conditioner amounting in all to Rs. 32,473. The Income-tax Officer allowed 1/5th of the salary of Rs. 5,460. The balance of Rs. 27,013 was disallowed by the Income-tax Officer by invoking section 40A(5) of the Act. The disallowance so made by the Income-tax Off....

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....350. Counsel for the assessee, Mr. P. G. K. Warrier, strongly urged that the said decisions require reconsideration. Counsel placed considerable reliance on the decisions of the Gujarat and Karnataka High Courts, respectively, in CIT v. Bharat Vijay Mills Ltd. [1981] 128 ITR 633 and International Instruments (P.) Ltd. v. CIT [1981] 130 ITR 315 and submitted that the decisions of this court in Travancore Rayons Ltd.'s case [1986] 162 ITR 732 and [1988] 172 ITR 350 require reconsideration. We perused the said decisions. In Travancore Rayons Ltd. v. CIT [1986] 162 ITR 732, this court considered the entire matter in detail and has also in terms referred to the decision of the Gujarat High Court in Bharat Vijay Mills Ltd.'s case [1981] 128 ITR 6....