Raju Auto Ltd v. The Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICGTION INCOME TAX REFERENCE NO. 278 of 1999 Raju Auto Ltd. ... Applicant. vs. The Commissioner of Income Tax ... Respondent Ms. V. B. Patel, for Applicant. Mr. Ashok Kotangale, Sr. Counsel with Mr. D.A. Dubey for Respondent. CORAM: V. C. DAGA AND A. S. AGUIAR JJ. Date:August 5, 2005. P. C.: 1. By this reference under section 256(1) of the Income-tax Act theTribunal has referred the following question of law for opinion at theinstance of the Revenue:Tribunal has referred the following question of law for opinion at theinstance of the Revenue: (1) Whether on the facts and in the circumstances of thecase and in law, the Tribunal was right in holding that theproportionate salary paid to the Managing Director forthe period of his stay abroad was not to be excluded forthe purpose of computing the disallowance under sec.40(c) read with sec. 40A (5)(b)(i) of the Income Tax Act ,1961? case and in law, the Tribunal was right in holding that theproportionate salary paid to the Managing Director forthe period of his stay abroad was not to be excluded forthe purpose of computing the disallowance under sec.40(c) read with sec. 40A (5)(b)(i) of the Income Tax Act ,1961? 2. Whether on the facts and in the circumstances of thecase and in law, the Tribunal was right in justified incase and in law, the Tribunal was right in justified in holding the guarantee commission paid by the assesseewas in the nature of capital expenditure placing relianceon the decision of the Gujarat High Court reported in 137ITR 389 regarding earlier orders of the Tribunal passedin assessee's own case. 3. Counsel for both the sides fairly agree that the above two questionsare covered by two different judgment of this court. They submit thatso far as first question is concerned it is covered by the judgment ofthis court in the case of Colour Chem Limited vs. Commissioner ofIncome Tax, reported in [1999] 238 ITR 171. So far as the secondquestion is concerned according to both the counsel the same iscovered by another judgment of this court in the case of KineticEngineering Ltd. Vs. Commissioner of Income Tax, reported in[1998] 233 ITR 762. are covered by two different judgment of this court. They submit thatso far as first question is concerned it is covered by the judgment ofthis court in the case of Colour Chem Limited vs. Commissioner ofIncome Tax, reported in [1999] 238 ITR 171. So far as the secondquestion is concerned according to both the counsel the same iscovered by another judgment of this court in the case of KineticEngineering Ltd. Vs. Commissioner of Income Tax, reported in[1998] 233 ITR 762. 4. In this view of the matter both questions are answered in thenegative, i.e. in favour of the assessee and against the Revenue.Reference stands disposed of with no order as to costs. negative, i.e. in favour of the assessee and against the Revenue.Reference stands disposed of with no order as to costs. (V. C. DAGA J. ) (A. S. AGUIAR J.)