R.K. Gulati, J. - (1.) BY this application under Section 256(2) of the Income-tax Act (for short "the Act"), the assessee requires that the Income-tax Appellate Tribunal, Delhi Bench 'C', New Delhi, be directed to refer the following four questions for the opinion of this court: " 1. Whether, on the facts and in the circumstances of the case, it is permissible under law to link together two sets of transactions, namely, the transaction of providing free accommodation to the directors and the transaction of letting out its own accommodation to other persons instead of considering and deciding the legality, reasonability and necessity separately ?
(2.) WHETHER, under law, the disallowance of Rs. 2,900 was legally correct on the ground that the assessee-company had provided alternate rented accommodation to its directors and has let out its own accommodation to other persons for rent and derived income under the head 'Property' ? " Whether, on the facts and in the circumstances, any disallowance was called for out of legal expenses particularly when expenses in respect of any one proceeding is less than Rs. 5,000 ? Whether, on the facts and in the circumstances of the case and in law, the subsidy of Rs. 57,956 sanctioned/received during the year in respect of machinery/generator installed in earlier years could be deducted from the cost of another machinery/generator of the value of Rs. 4,00,190 purchased and installed during the year for the purposes of allowance of investment allowance and whether short allowance of investment allowance was not illegal ?" 2. Questions Nos. 1 and 2 are interconnected and can conveniently be dealt with together. The assessee, a private limited company, owned certain residential accommodation which was previously occupied by two of its directors. Later, in the last two months of the previous year relevant to the assessment year 1982-83 which is in dispute, the directors were provided hired residential accommodation for which a rent of Rs. 2,450 per month was paid by the assessee. The accommodation vacated by the directors was let out to two brothers of the directors at a monthly rent of Rs. 500 each. In this way, an excess amount of Rs. 2,900 was debited under the head "Rent account" in the profit and loss account of the assessee. The excess expenditure was disallowed by the Assessing Officer with the remarks : "The assessee stated that the two kothis which were occupied by M.S. Jain and S.S. Jain were vacated and were let out to Sukhmal Chand Jain and Sri Pal Jain at Rs. 500 per month. It is to be noted that Sukhmal Chand Jain and Sri Pal Jain are the brothers of the directors, Sri S.S. Jain and M.S. Jain. It is not understood that, when the assessee was having kothi of its own at Prabhat Nagar, where was the necessity of taking a building on hire. The assessee has charged only Rs. 500 per month from Sukhmal Chand Jain and Sri Pal Jain but paid much higher rent for the furnishing of free residences to S.S. Jain and M.S. Jain. Therefore, the extra rent which has been paid by the assessee-company is not for business purposes but is to accommodate the younger brothers of the directors. Such largess bestowed certainly is not for business purposes." 3. The view taken by the Assessing Officer in due course was upheld by the Income-tax Appellate Tribunal. 4. Now, whether an expenditure is laid out or expended wholly and exclusively for the purposes of business is essentially a question of fact based on appreciation of evidence and the other attending circumstances. This court, under Section 256 of the Act, is not entitled to go behind the findings of fact recorded by the Income-tax Appellate Tribunal unless such findings are challenged by an appropriate question. The assessee failed to furnish any material under which it became necessary for the assessee to provide hired residential accommodation to its directors. Further, it also failed to establish that the rent charged from the two brothers of the directors was reasonable and that it represented the market rent. Nothing was brought to our notice to show that the findings recorded by the Income-tax Appellate Tribunal were defective in any manner or the dispute in question had not been dealt with by the Income-tax Appellate Tribunal in the right perspective. We find that the Tribunal has decided the issue on an appreciation of the facts of the case and its order does not suffer from any infirmity in the appreciation of such evidence or the application of law thereto. Accordingly, questions Nos. 1 and 2, being pure questions of fact, are not fit for reference under Section 256 of the Act.
(3.) COMING to question No. 3, the assessee claimed deduction of Rs. 25,080 under the head "Legal Expenses". Out of this amount, Rs. 11,000 was paid on account of retainership fee and the balance amount of Rs. 14,080 was paid to an advocate for appearance before the income-tax appellate authorities. The Assessing Officer allowed an expenditure of Rs. 5,000 only in view of Section 80VV of the Act. On appeal, the first appellate authority allowed a further deduction of Rs. 11,000 paid as retainer fee, thus restricting the disallowance to Rs. 9,080 only. The appellate order was upheld by the Income-tax Appellate Tribunal. Learned counsel for the assessee did not dispute that the disallowance sustained by the Tribunal could not have been allowed in view of the provisions contained in Section 80VV of the Act. However, he argued that the same was a permissible deduction within the meaning of Section 37(1) of the Act in computing the total assessable income of the assessee.;