MERCANTILE EXPRESS CO PRIVATE LTD Vs. COMMISSIONER OF INCOME TAX CALCUTTA
HIGH COURT OF CALCUTTA
MERCANTILE EXPRESS CO PRIVATE LTD
COMMISSIONER OF INCOME TAX CALCUTTA
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(1.) WE do not feel inclined to issue a Rule in this case. We are satisfied that no question of law arises in this application under section 66 (2) of the Income Tax Act. The questions, as framed in paragraph 8 of the petition, in our view, are really and essentially questions of facts in this case.
(2.) THE question proposed by the assessee relates to a claim for remuneration to a Director as a permissible deduction. The petitioner claimed a certain amount and the Income Tax Authority has reduced that amount. It turns on the newly amended section 10 (4a) of the Income Tax Act introduced by section 7 of the Finance Act of 1956 with effect from the 1st April, 1956. By the opening expression, "nothing in sub-section (2) shall, in the computation of profits and gains of a Company", this newly amended sub-section gets rid of the effect of the legal decisions on section 10 (2) prior to the amendment. The material portion of the language now is:
"if in the opinion of the Income Tax Officer any such allowance is excessive or unreasonable having regard to the legitimate business needs of the Company and the benefit derived by or accruing to it there from. . . . . . "
(3.) THE result of introducing the opinion of the Income Tax Officer is to get round the effect of the previous decisions on section 10 (2) (xv) and similar expressions used in section 12 (2) of the Income Tax Act reflected respectively in the decisions of the New-ton Studios Ltd. , Madras v. Commissioner of Income Tax, Madras, (1) A. I. R. 1955 Mad. 646 decided on April 11, 1855 and Eastern Investments Ltd. v. Commissioner of Income Tax, West Bengal (2) A. I. R. 1951 S. C. 278 decided on May 4, 1951, which appeared to suggest that it was not the Income Tax Officer but the business concerned to judge its commercial needs and the remuneration it chooses to pay.;
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