COMMISSIONER OF INCOME TAX Vs. BHARAT VIJAY MILLS LIMITED

JUDGEMENT

(1.) THE Commissioner of Income -tax, Gujarat -I, has got two question of law referred to us by the Income -tax Appellate Tribunal, Ahmedabad Bench 'A', for our opinion as per the provision of s. 256(1) of the I.T. Act, 1961. The referred question read as follows :

(2.) THE facts leading to this reference in so far as they are relevant may not be briefly stated. The assessee is a public limited company incorporated under the Companies Act, 1956. The relevant assessment year is 1972 -73. At that time, it was carrying on business of manufacturing cotton textile goods in Kalol in Mehsana District. In filed a return of income on 24th June, 1972, declaring a total income of Rs. 9,49,483. The assessee -company had claimed certain deduction from its total income and amongst other, one claim of deduction centered round certain medical benefits given by the company to its two employees viz., D. B. Patel and A. P. Patel, who were two executives of the company and who were relatives of the directors at the relevant time. Out of the total perquisites made available by the assessee -company to its aforesaid employees, the ITO disallowed an amount of Rs. 3,554 by treating the said amount as excess perquisites which, according to the ITO, could not be allowed as per the provision of s. 40A(5) of the Act.

(3.) THE aforesaid two amounts disallowed by the ITO are the subject -matter of controversy between the parties in the present proceedings before us.