1990 (5) TMI 37

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....k together two sets of transactions, namely, the transaction of providing free accommodation to the directors and the transaction of letting out its own accommodation to other persons instead of considering and deciding the legality, reasonability and necessity separately ? 2. Whether, under law, the disallowance of Rs. 2,900 was legally correct on the ground that the assessee-company had provided alternate rented accommodation to its directors and has let out its own accommodation to other persons for rent and derived income under the head 'Property' ? 3. Whether, on the facts and in the circumstances, any disallowance was called for out of legal expenses particularly when expenses in respect of any one proceeding is less than Rs. 5,....

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....al Jain are the brothers of the directors, Sri S. S. Jain and M. S. Jain. It is not understood that, when the assessee was having kothi of its own at Prabhat Nagar, where was the necessity of taking a building on hire. The assessee has charged only Rs. 500 per month from Sukhmal Chand Jain and Sri Pal Jain but paid much higher rent for the furnishing of free residences to S. S. Jain and M. S. Jain. Therefore, the extra rent which has been paid by the assessee-company is not for business purposes but is to accommodate the younger brothers of the directors. Such largess bestowed certainly is not for business purposes." The view taken by the Assessing Officer in due course was upheld by the Income-tax Appellate Tribunal. Now, whether an ....

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....,080 was paid to an advocate for appearance before the income-tax appellate authorities. The Assessing Officer allowed an expenditure of Rs. 5,000 only in view of section 80VV of the Act. On appeal, the first appellate authority allowed a further deduction of Rs. 11,000 paid as retainer fee, thus restricting the disallowance to Rs. 9,080 only. The appellate order was upheld by the Income-tax Appellate Tribunal. Learned counsel for the assessee did not dispute that the disallowance sustained by the Tribunal could not have been allowed in view of the provisions contained in section 80VV of the Act. However, he argued that the same was a permissible deduction within the meaning of section 37(1) of the Act in computing the total assessable i....