The Commissioner Of Income-Tax, Haryana, Rohtak v. M/S Porrits & Spencer (Asia) Ltd., New Delhi

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.R. No.3 of 1997Date of decision: 16.09.2008 The Commissioner of Income-tax, Haryana, Rohtak. Vs. M/s Porrits & Spencer (Asia) Ltd., New Delhi. -----Applicant -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR JUSTICE RAKESH KUMAR GARG Present:Mr. Yogesh Putney, Sr. Standing Counsel for the revenue.for the revenue. ORDER: Mr. A.C. Jain, Advocate for assessee. ----- Following questions of law have been referred for opinion ofthis Court by the Income Tax Appellate Tribunal, Delhi Bench ‘E’,arising out of I.T.A. Nos.3336 and 3506/DEL/1989 in respect ofassessment year 1985-86:- “1. Whether, on the facts and in the circumstances of thecase, the Tribunal was justified in directing theAssessing Officer to recalculate the disallowance u/s37(3-A) to 37(3D) excluding the expenses on road-tax.”?case, the Tribunal was justified in directing theAssessing Officer to recalculate the disallowance u/s37(3-A) to 37(3D) excluding the expenses on road-tax.”? 2. “Whether, on the facts and in the circumstances of thecase, the Tribunal was right in law in upholding thedecision of the Ld.CIT(A) deleting the addition ofcase, the Tribunal was right in law in upholding thedecision of the Ld.CIT(A) deleting the addition of Rs.1,58,707/- made u/s 36(1)(ii) on a/c ofcommission/bonus paid to employees”? 3. “Whether, on the facts and in the circumstances of thecase, the ITAT was right in law in holding that theproviso to section 43B inserted by the Finance Act,1987 w.e.f. 1.4.88 is retrospectively applicable?” As regards question No.1, the finding of the Tribunal is asunder:- “12. Next ground is against the disallowance ofRs.25,707/- u/s 37(3A) and 37(3D). At the time of hearingbefore us it is submitted that the car expenses, consideredfor disallowance @ 20% as per provisions of Sec. 37(3A)and 37(3D) included a sum of Rs.1,28,582/- on repair,insurance, road tax and of car and wages of driver. Suchexpenses are allowable u/s 31 of the I.T. Act and not u/s 37.Hence, the same cannot be considered for disallowance u/s37(3A) and 37(3D). In this respect, he relied upon NathmalBankat Lal Parikh & Co. Vs. CIT, 122 ITR 168 (AP). The above view cannot be accepted in view of judgment of the Hon’ble Supreme Court in Britannia Industries Limitedv.Commissioner of Income-tax and another (2005) 278 ITR 546,holding that section 31 will not be attracted to cases which are coveredby the provisions of disallowance under Section 37(3-A) to 37(3D).Accordingly, the said question is answered against the assessee and infavour of the revenue. Question No.2 is covered by our order passed today inI.T.R. Nos.80 to 82 of 1982 (M/s Porrits & Spencer (Asia) Ltd., New Delhi v. The Commissioner of Income-tax, Haryana). This question is accordingly, decided in same terms. As regards question No.3, the matter is covered against therevenue in view of judgment of the Hon’ble Supreme Court in AlliedMotors P. Ltd. v. CIT (1997) 224 ITR 677, holding that Section 43-B isretrospective. Accordingly, the said question is answered in favour ofassessee and against the revenue. The reference is disposed of accordingly. ( ADARSH KUMAR GOEL )JUDGE September 16, 2008 ashwani ( RAKESH KUMAR GARG )JUDGE