SEN, J. - (1.) THE Tribunal has referred the following question of law to this Court under s. 256(1) of the IT Act. 1961 ('the Act'): "Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that the disallowance of Rs. 52,000 out of the hiring charges claimed to have been paid for the lifts to Equipment Leasing Co. was not justified?"
(2.) THE question that has come up for consideration before this Court cropped up also in the earlier assessment years. The Tribunal's order disposing of the case for the asst. yr. 1971-72 in IT Appeal No.146 (Cal) of 1974-75 has been annexed to the statement of case. The facts as found by the Tribunal are as under: "The assessee is a company. The assessment year involved is 1973-74 for which the previous year ended on 31st March, 1973. The assessee carried on business as a dealer in shares, land and hire purchases. In addition, the assessee also derived income from house property and other sources such as dividend and lease rent, etc. The assessee-company as in the proceeding the assessment years had claimed expenses of Rs. 72,000 alleged to have been paid to Equipment Leasing Co. as hiring and service changes in respect of lifts installed in its premises. For the reasons mentioned in the preceding assessment years, the ITO held that Equipment Leasing Co. was a mere benami concern and the said concern was brought into existence in order only to receive the service charges which had the effect of minimising the assessee's income for the purpose of Income-tax. Thus, the ITO came to the conclusion that the payment of Rs. 72,000 was bogus. However, the ITO, considering the fact that the assessee must have incurred some expenses in connection with operational and service charging in respect of lifts, allowed a sum of Rs. 20,000 on estimate and added the balance sum of Rs. 52,000 to the assessee's total income. The assessee appealed to the CIT (A) against the disallowance of the above sum of Rs. 52,000. The CIT (A) found that the issue was concluded by the Tribunal in favour of the assessee in its order in IT appeal No.146 (Cal) of 1974-75 for the asst. yr. 1971-72. Hence, following the aforesaid order of the Tribunal deleted the addition of Rs.52,000. The Revenue came up in appeal before the Tribunal against the deletion of Rs. 52,000 by the CIT (A). The Tribunal following the earlier order dt. 3rd May, 1976 confirmed the deletion of Rs. 52,000 and dismissed the Departmental appeal."
(3.) THE reasons given in the earlier order for upholding the contention of the assessee by the Tribunal were as follows: "We need not discuss the case laws referred to us because our decision on the point in issue would entirely depend upon the facts and circumstances of the case. Hence, in view of our discussions in the foregoing paragraphs we agree with the learned counsel for the assessee that the authorities below had failed to establish the case of benami against the assessee company with reference to the concern of Equipment Leasing Co.. Here, we must mention that whatever little more was paid to the said concern by the assessee company represented remuneration to the proprietor of the said concern and for the risk he had taken in launching upon the business. Therefore, we conclude by holding that the expenditure of Rs. 72,000 was laid out or expended wholly and exclusively for the purpose of making or earning income by way of service charges from the tenants,. The ITO is directed to allow the expenditure in full." ;