Commissioner of Income-tax Vs. Vickers Sperry of India Ltd. - Court Judgment

Excerpt:
- indian penal code, 1860 [c.a. no. 45/1860].sections 124-a, 153-a, 153-b, 292, 293 & 295a; [f.i. rebello, smt v.k. tahilramani & a.s. oka, jj] declaration as to forfeiture of book held, the power can be exercised only if the government forms opinion that said publication contains matter which is an offence under either of sections 124-a, 153-a, 153-b, 292, 293, 295a of i.p.c., dr. b.p. saraf, j.1. by this reference under section 256(1) of the income-tax act, 1961, made at the instance of the commissioner of income-tax, the income-tax appellate tribunal has referred the following question for opinion : 'whether, on the facts and in the circumstances of the case, rent free accommodation and the cash house rent allowance provided by the assessee-company to its employees under the terms of the contract of employment are not perquisites within the meaning of section 40(a)(v) of the income-tax act entitling the assessee to a deduction of rs. 16,989 ?' 2. the assessee is a limited company. briefly stated, the relevant facts are as follows : the assessee-company claimed a rent allowance of rs. 91,908 which also included some cash rent allowance. the assessment year was 1971-72. the income-tax officer found that, in the case of four employees, the house rent allowance, whether paid in cash or otherwise, exceeded one-fifth of their salary. such excess came to rs. 16,989. he, therefore, held that, out of the total house rent allowance of rs. 91,908 a sum of rs. 16,989 was not allowable under section 40(a)(v) of the income-tax act, 1961. the appeal of the assessee against this disallowance before the appellate assistant commissioner was rejected. on further appeal, the income-tax appellate tribunal, however, reversed the finding of the income-tax officer and held that the disallowance of rs. 16,989 by taking resort to section 40(a)(v) was not correct. according to the tribunal, the said section had no application to the facts of the case. the commissioner of income-tax sought a reference and, accordingly, the present reference was made by the tribunal under section 256(1). 3. we have heard learned counsel for the commissioner. we have carefully gone through the order of the tribunal. we find that the tribunal gave its finding on the basis of the basis of the circular of the central board of direct taxes bearing no. f. no. 10/93/68-it(aii) dated october 29, 1969. the tribunal, following the decision of the supreme court in the case of navnit lal c. javeri v. k. k. sen, aac of i. t. : [1965]56itr198(sc) , held that the circular of the board was binding on the department authorities under the act and, following the same, allowed relief to the assessee. 4. there is no dispute before us that the circular of the board covers the controversy. according to that, the amount in question cannot be disallowed. that being so, in our opinion, the tribunal was right in holding that the department authorities were bound by the circular of the board and to act accordingly. we do not see any error in the decision of the tribunal in that regard. 5. in view of the foregoing discussion, we answer the question in the affirmative and in favour of the assessee. 6. in the facts and circumstances of the case, we make no order as to costs.