Sabyasacht Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to the deduction of Rs. 700 being a part of the house rent paid by the assessee against his share income from the firm under Section 38 of the Income-tax Act, 1961 ? "
(2.) The assessment year involved is 1971-72, The assessee is a partner in the firm of chartered accountants known as M/s. Price Waterhouse Peat & Co. His share of income from the above firm during the year under consideration was Rs. 62,384. The assessee claimed deduction of Rs. 700 under Section 38(1) for the use of a part of the dwelling house and Rs. 2,400 out of the part of car expenses under Section 37(1) as having been incurred for the purpose of earning his share income from the above firm. The ITO disallowed the assessee's claim without assigning any reason.
(3.) There was an appeal. The AAC observed that the ITO had not disputed that the expenditure had been incurred for the purpose of business of the firm. He accepted the assessee's contention that the expenditure was an allowable one. He, therefore, directed the ITO to allow the deductions claimed by the assessee.;