Y.R.Meena, J. - (1.) On an application under Section 256(1) of the Income-fax Act, 1961, the Tribunal has referred following question, set out at page 2 of the paper book for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Assessing Officer not to take into account the sum of Rs. 4,45,305 being expenditure on repair of motor cars for computing the disallowance under Section 37(3A)/(3B) of the Income-tax Act, 1961?"
(2.) The assessee-company derives income from manufacturing and sale of printing ink and synthetic resins. The return of income along with the audited accounts filed on August 9, 1985, assessment year is 1985-86. During the course of on examination of the return, the Income-tax Officer noticed that the assessee has claimed a sum of Rs. 4,45,305 being expenditure on repairs of motor cars. The Income-tax Officer has disallowed part of the amount under the provisions of Section 37(3A) and (3B) of the Income-tax Act, 1961. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has confirmed the view taken by the Assessing Officer. In appeal before the Tribunal, the assessee placed reliance on the judgment of the Bombay High Court in the case of CIT v. Chase Bright Steel Limited (No. 1) [1989] 177 ITR 124, and the decision of the Delhi Bench of the Tribunal published in Enkay (I.) Rubber Co. (P.) Ltd. v. IAC [1992] 40 ITD 114. Following the view taken by the Bombay High Court, the Tribunal held that the expenses relating to repair of motor cars are covered by Section 31 and, therefore, did not come within the ambit of Section 37(1) read with Section 37(3A) of the Act.
(3.) Learned counsel for the Revenue submits that in the earlier assessment year in the case of this assessee the court has taken the view that the amount of reimbursement of motor car expenses incurred by the employees in using their own motor car in performance of their duties and for the business of the company, the provisions of Section 37(3A)/(3B) of the Income-tax Act, 1961, are applicable as the reibursement for running and maintenance of a car is covered by the Explanation to Sub-section (3A) of Section 37 of the Act.;