2007 (9) TMI 263

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....s and in the circumstances of the case, the Tribunal was justified in law in holding that for disallowance under section 40A(5) of the Income-tax Act, 1961 : (a) Taxable part of the house rent allowance paid to the employees of the assessee be treated as salary and not the total house rent allowance paid in cash. (b) Conveyance allowance which is not exempt under section 10(14) of the Income-tax Act would only form part of the salary and not the total conveyance allowance. (c) Car perquisite should not be a determined in accordance with rule 3 of the Income-tax Rules, 1962. 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the following expenses  do not qualify ....

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....itten off by the assessee and the Inspecting Assistant Commissioner (Assessment) (who was the Assessing Officer) added back this amount to the income of the assessee. The view expressed by the Assessing Officer was upheld in appeal by the Commissioner of Income-tax (Appeals) as well as by the Tribunal. 5. According to learned counsel for the assessee, the amounts do not  represent the income of the assessee and in this regard reliance has been  placed on the decision of the Supreme Court in CIT v. Sugauli Sugar Works P. Ltd. [1999] 236 ITR 518. It may be mentioned at this stage that this decision is rendered by the two learned judges of the Supreme Court. In this decision, it has been held that a mere entry in the books of acco....

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.... were considered. The decision in the case of CIT v. T. V. Sundaram Iyengar and Sons Ltd. [1996] 222 ITR 344 was distinguished by the Supreme Court as not being relevant to the facts of the case on hand while the case of CIT v. Sugauli Sugar Works P. Ltd. [1999] 236 ITR 518 was followed. The decision of three learned judges of the Supreme Court in Chief CIT v. Kesaria Tea Co. Ltd. [2002] 254 ITR 434 pertained to a statutory liability, namely, a purchase tax liability. It was held by the Supreme Court, with reference to section 41(1) of the Act, that a unilateral action on the part of the assessee by way of writing off such purchase tax liability in its accounts does not necessarily mean that the liability ceased in the eye of law. Great emp....