Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the learned Tribunal has erred in law in agreeing with the submissions of the assessee that the value of other perquisites should be made in accordance with the corresponding rules contained in IT Rules in conformity with the judgments in CIT vs. Nuchem Plastics Ltd. (1990) 82 CTR (P&H) 357 : (1989) 179 ITR 196 (P&H) : TC 18R.323 and Geoffrey Manners & Co. Ltd. vs. CIT (1996) 136 CTR (Bom) 169 : (1996) 221 ITR 695 (Bom) : TC S18.2014 ?

Counsel Appeared

R.P. Sawhney with Rajesh Bindal, for the Appellant : None, for the Respondent

JUDGMENT

BY THE COURT :

This is an appeal under s. 260A of the IT Act, 1961 (for short the ‘Act’), for determination of the following question of law: “Whether, on the facts and in the circumstances of the case, the learned Tribunal has erred in law in agreeing with the submissions of the assessee that the value of other perquisites should be made in accordance with the corresponding rules contained in IT Rules in conformity with the judgments in CIT vs. Nuchem Plastics Ltd. (1990) 82 CTR (P&H) 357 : (1989) 179 ITR 196 (P&H) : TC 18R.323 and Geoffrey Manners & Co. Ltd. vs. CIT (1996) 136 CTR (Bom) 169 : (1996) 221 ITR 695 (Bom) : TC S18.2014 ?”

2. The facts of the case are that the assessee (respondent) filed a return of income on 29th July, 1988, for the asst. yr. 1988-89 declaring its income at Rs. 19,70,400. Subsequently, a revised return was filed on 21st Feb., 1991, declaring income of Rs. 20,44,340. The assessing authority passed the order of assessment dt. 16th March, 1992, under s. 143(3) of the Act, vide which he disallowed the claim of the assessee to the tune of Rs. 29,24,488 under s. 35 of the Act. The appeal filed by the assessee was partly allowed by the CIT(A) and in the second appeal preferred by it, the Tribunal, Delhi Bench “C”, New Delhi, granted further relief in the following terms : “3. The next ground is regarding disallowance of Rs. 76,003 out of perquisites given to the managing director. Both the parties have admitted that this issue is fully covered by the decision of the Tribunal in ITA No. 7022/D of 1992, for the asst. yr. 1988-89 in the case of the appellant. We have carefully gone through the said decision which was rendered after applying the decision of the apex Court in the case of CIT vs. Mafatlal Gangabhai & Co. (P) Ltd. (1996) 132 CTR (SC) 248 : (1996) 219 ITR 644 (SC) : TC S18.2017. Respectfully following the precedent, we decide the issue in favour of the assessee and against the Revenue. The AO is directed to compute the amount of disallowance under s. 40A(5) in conformity with the decision of the Tribunal for the asst. yr. 198889 in the case of the appellant.

4. The next ground relates to disallowance out of car expenses and depreciation thereon. Rival submissions have been heard, material on record has also been perused carefully. Out of the total cars, only one car has been made available for use by the managing director. We, therefore, direct the AO to restrict the disallowance to the extent of 1/8th in respect of the car expenses and depreciation relatable to one car only which has been kept at the disposal of the managing director.

5. The next ground relates to disallowance of sales promotion expenses alleging the same as entertainment expenditure. Both the parties have agreed that the issue is squarely covered by the decision of the Tribunal in ITA No. 7022/D of 1992 and 7086/D of 1992 for the asst. yr. 1988-89 in the case of the appellant. Respectfully following the precedent, we direct the AO to treat 1/3rd of the total entertainment expenditure attributable to employees participation. The AO is directed to compute the amount of relief accordingly.”

3. We have heard Shri R.P. Sawhney and perused the record. In our opinion, the reasons assigned by the Tribunal for accepting the assessee’s claim for disallowance do not suffer from any legal infirmity. Therefore, no substantial question of law arises for consideration by this Court. An additional reason for not entertaining the appeal is that the Revenue did not challenge the orders passed by the Tribunal in ITA Nos. 7022/D of 1992 and 7086/D of 1992 for the asst. yr. 1988-89, in which similar relief was granted to the assessee. For the reasons mentioned above, the appeal is dismissed.

[Citation : 248 ITR 701]