M.KUMAR, J. - (1.) THIS order shall dispose of ITR Nos. 82 of 1989, 64 of 1992, 18 and 19 of 1993 as identical questions of law have been raised. The controversy in the present bunch of references has emerged out of the orders passed by the Income -tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, 'the Tribunal'), in the following cases : Sr. IT Ref. No. Tribunal's Arising out of Assessment No order Year dated 1. 82 of 1989 [CIT vs. M/s Ess Ess Kay 7.5.1987 ITA No. 1981 -82 Engg. Co. (P) Ltd., Kapurthala] 30/Asr/1987 2. 64 of 1992 [CIT vs. M/s Ess Ess Kay 14.9.1990 ITA No. 1979 -80 Engg. Co. (P) Ltd., Kapurthala] 263/Asr/1990 3. 18 and 19 of 1993 [CIT vs. M/s Ess Ess 21.9.1992 ITA No. 704 1982 -83 and Kay Engg. Co. (P) Ltd., Kapurthala] and 1983 -84 705/Asr/1987
(2.) THE common questions of law, which have arisen in these references are as under : "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the disallowance made representing value of perquisite of concessional rate of interest charged on borrowings from managing director (Rs. 29,610) and meeting fees (Rs. 2,400) which are clearly hit by proviso to s. 40A(5)/40A(6) of the IT Act, 1961 ? 2. Whether on the facts and in the circumstances of the case and keeping in view the provisions of s. 40(c)(A) of the IT Act, 1961, the Tribunal is right in law in holding that amount of Rs. 2,400 being the director's meeting fee over and above the total emoluments of the director amounting to Rs. 72,000 is allowable -
(3.) IN order to put the controversy in proper perspective, the facts are being stated from ITR No. 64 of 1992. As per the statement of the case, the assessee is a private limited company. dealing in manufacture and sale of electrical making additions, inter alia, on account of disallowance under s. 40A(5)/40A(6) as well as disallowance on account of concessional interest charged from the managing director on the borrowings/drawings. The assessee filed an appeal deleting the additions on account of disallowance made under ss. 40A(5)/40(A)(6) and 37(3A) and concessional interest charged from the managing director on the borrowings/drawings. The Tribunal upheld the order of the CIT(A). The matter is no longer res integra. A Division Bench of Andhra Pradesh High Court in the case of CIT vs. Vazir Sultan Tobacco Co. Ltd. (1988) 73 CTR (AP) 176 : (1988) 173 ITR 290 (AP), has taken the view that the difference between the concessional rate of interest and the market rate of interest on loans advanced to employees for building houses was not to be considered as a perquisite for the purposes of s. 40(c). Hon'ble the Supreme Court in the case of CIT vs. Indian Engineering & Commercial Corp. (P) Ltd. (1993) 112 CTR (SC) 56 : (1993) 201 ITR 723 (SC), has observed that in the case of directors, who are also employees, both the provisions are attracted. Likewise, for determining permissible expenditure which is outside the ceiling limit, both these ceilings would be applicable. For the aforementioned proposition reliance may be placed on the judgment of Hon'ble the Supreme Court in the case of CIT vs. Continental Construction Ltd. (1998) 145 CTR (SC) 1 : (1998) 230 ITR 485 (SC). Accordingly, we confirm the view taken by the Tribunal in upholding the order of the CIT(A), which is consistent with the view expressed by the Division Bench of Andhra Pradesh High Court in the case of Vazir Sultan Tobacco Co. Ltd. (supra) and the Division Bench judgment of Calcutta High Court in the case of Indian Oxygen Ltd. vs. CIT (1995) 123 CTR (Cal) 224 : (1994) 210 ITR 274 (Cal). Therefore, the question is decided against the Revenue. A photocopy of this order be placed in the file of the connected cases.;