TaxTMI 
TaxTMI 
1979 (2) TMI 77
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....relevant year ? " The assessee was a private limited company. It submitted a return declaring an income of Rs. 25,23,265. In the statement accompanying the return, the assessee had disallowed a sum of Rs. 55,701 out of the remuneration paid. Neither in the statement of the case nor in any of the orders is there any detail as regards, (a) the person to whom remuneration was paid, and (b) the amount of remuneration paid out of which the disallowance was made in the assessee's own statement. However, by a letter dated 27th November, 1968, the assessee claimed that the disallowance of Rs. 55,701 made in the adjustment statement enclosed with the return might be deleted as, according to it, the provisions of s. 40(c)(iii) of the Act, introduced by the Finance Act of 1963, was applicable only for 1963-64 (assessment year) and not for the later years. By the Finance Act of 1964, s. 40(c)(iii) was amended so as to disallow any perquisites given to the employee in excess of twenty per cent. of the salary paid after 28th February, 1964. As a result of the amendment made in the year 1964, there was no scope for disallowance of any remuneration as such. It is this aspect which was placed be....
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....ess needs of the company and the benefit derived by or accruing to if therefrom. If the remuneration was considered to be excessive or unreasonable, then he had power to disallow the expenditure to that extent. Clause (iii) was added by the Finance Act of 1963 with effect from 1st April, 1963. Originally, as may be seen from the extract, there were only two sub-clauses to s. 40(c). By s. 6 of the Finance Act of 1963, the following was inserted as sub-cl. (iii) : " any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to an employee who is a citizen of India, to the extent such expenditure exceeds the amount calculated at the rate of five thousand rupees per month for any period of his employment after the 28th day of February, 1963 :....." There is a proviso, but it is unnecessary to extract it here. Section 1(2) of the Finance Act of 1963 provided that this provision, among others, should be deemed to have come into force on the 1st of April, 1963. The Finance Act of 1963 itself received the assent of the President on the 28th April, 1963. It may be seen from this provision that there was a ceiling fixed on the rem....
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.... could be allowed under the. I.T. Act, the total amount paid to the employee in the present case, according to the assessee, should have been allowed as deduction. Learned counsel for the revenue challenges this contention which found favour with the AAC and the Tribunal. It is a well settled proposition in the income-tax law that in income-tax matters, the law to be applied is the law in force in the assessment year unless otherwise stated or implied. This proposition was laid down by the Supreme Court in CIT v. Isthmian Steamship Lines [1951] 20 ITR 572. In that case, the assessee was a company incorporated in the United States of America and owned steamships which visited India. The assessee was being assessed to Indian income-tax. There was unabsorbed depreciation at the end of 1938-39. When the Indian I.T. Act of 1922 was amended with effect from 1st April, 1939, it was provided by s. 10(2)(vi) that the unabsorbed depreciation allowance should be allowed to be further carried forward and form part of the allowance for the next year and so on. In the assessments for 1941-42, 1942-43 and 1943-44, the assessee claimed that the unabsorbed depreciation of 1938-39 should be taken....
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....ed by s. 6 of the Finance Act of 1963, there is a specific provision which says that any expenditure resulting directly or indirectly in the provision of any remuneration or benefit or amenity to an employee, who was a citizen of India, to the extent such expenditure exceeds the amount calculated at the rate of five thousand rupees per month for any period of his employment after the 28th day of February, 1963, could be disallowed. This provision would ordinarily have applied to control the remuneration paid in the present case subsequent to the 28th February, 1963, unless there was any change in the law subsequently. Under the Finance Act of 1964, a new provision was inserted and that was with effect from 29th February, 1964. Both these provisions clearly show that what is intended to be affected is the payment of salary or remuneration or the grant of any benefit or amenity for a period sub- sequent to the particular dates. They are not linked to any assessment year as such or even previous years. The aim and intention of the provisions is to control the allowance of remuneration or the grant of any benefit or amenity during the period the respective provisions were in force, des....