The Commissioner Of Income Tax v. Jaya Hind Industries Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICGTION INCOME TAX REFERENCE NO. 259 of 1988 The Commissioner of Income Tax ... Applicant. vs. Jaya Hind Industries Ltd., .... Respondent Mr. Ashok Kotangale for Applicant.Mr. B. Vaidya i/b. S.N. Inamdar for Respondent. CORAM:V.C.DAGA AND A. S. AGUIAR JJ. Date: 4[th] July, 2005. P. C.: 1. The questions of law referred to this court for opinion under section256(1) of the Income-tax Act, by the Tribunal at the instance of theassessee are as follows: 1) Whether on the facts and in the circumstances of thecase, the Tribunal was right in law in holding that theassessee is entitled to a deduction of Rs.5,00,000/- andRs.4,25,000/- for Assessment Years 1978-79 and 1979-80 being the contribution made by the assessee to a welfare trust? 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that theprovisions sec. 40(c) are attracted in respect ofremuneration and perquisites of the Managing Directorof the assessee company, leading to allowance ofRs.12,539/- for Assessment Year 1978-79 andRs.9,102/- for Assessment Year 1979-80? 2. So far as the first question as to whether the assessee isentitled to a deduction of Rs.5,00,000/- and Rs.4,25,000/- forAssessment Years 1978-79 and 1979-80 being the voluntarypayment made by the assessee to a welfare trust, on the ground ofcommercial expediency would be an allowable deduction undersection 37 as held in the judgment of the Division Bench of this courtin the case of Commissioner of Income Tax vs. B.G.Shirke & Co.,reported in [2003] 127 TAX,AM 245 (BOM.). Accordingly followingthis judgment, the first question is answered in the affirmative, infavour of the assessee and against the Revenue. 3. So far as the second question is concerned the same is covered by Commissioner of Income Tax vs. Hico Products Pvt. Ltd. [1993] 201 ITR page 567. Following the same ratio we hold that theprovisions sec. 40(c) are attracted in respect of remuneration andperquisites of the Managing Director of the assessee company.The above question is thus answered in favour of the assessee andagainst the Revenue. (V. C. DAGA J. ) (A. S. AGUIAR J.) -x-