TMI Blog2001 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... , expenses incurred for the maintenance of Adyar House occupied by the Deputy Chairman of the assessee-company and also property tax, urban land tax, insurance premium, electricity charges, gardener salary, depreciation, pest control expenses and medical expense reimbursement as perquisite for the purposes of computing the disallowance under section 40(c) of the Income-tax Act, 1961. The Income-tax Officer did not take these expenditure into account for the purposes of computing the amount disallowable under section 40(c). But, however, the Commissioner of Income-tax (the "CIT") by virtue of his powers under section 263 of the Act, revised the order of the Income-tax Officer allowing certain expenses to be deducted for computing the income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity charges, gardener's salary, depreciation and pest control expenses should be included in arriving at the amount of disallowance under section 40(c)? (3) Whether the Tribunal is right in holding that the medical expenses reimbursed should be included in arriving at the amount of disallowance under section 40(c)?" As far as the first question referred at the instance of the Revenue, a similar case arose for the consideration of the apex court in the case of Prakash Beedies P. Ltd. v. CIT [1993] 201 ITR 1063 where it has been held as follows: "The payments were made to the partners in consideration of their valuable right parted with by the firm in favour of the company. Even assuming that the payments were to the partners, so lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of perquisite assessed in the hands of the director or employee. It may be true that a car placed at the disposal of the director was mostly used for the company's purpose and was used for the personal purpose of the directors rarely and even in such case, the actual expenditure incurred by the company will have to be subject to the ceiling under section 40(c) of the Act. In considering the deductibility of the expenditure, the section is not concerned with the extent of the use of the asset by the director or employee for his personal use. But, the section focuses its attention on the expenditure claimed by the assessee on its asset used by the director. In other words, the quantum of allowance or disallowance is not related to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee's grounds of appeal touch but a particular aspect of the Income-tax Officer's order. This theory is only a short hand way of reminding us that the assessee is not the dominus litus in an appeal before the Appellate Assistant Commissioner, that even if he wishes to withdraw the appeal, the Appellate Assistant Commissioner can get on with it, and that the Appellate Assistant Commissioner can go beyond the subject-matter of the appeal and enhance the assessment. The theory that the record of assessment as a whole gets removed before the Appellate Assistant Commissioner is but an enigma and must not be literally understood. We have, on an examination of the provisions of the Act, been able to arrive at the position that the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression, 'expenditure' in section 40A(5) is wide enough to cover expenses on repairs. It cannot be confined only to extraordinary expenditure incurred by the assessee by way of renovation, but it would include and encompass within itself the normal repair expenditure and also the expenditure incurred at the behest of the employee to keep the house in a comfortable living and habitable condition. Electricity charges and depreciation would also be covered by section 40A(5). Hence, depreciation, electricity charges and expenses on repairs would be subject to the ceiling under section 40A(5)." As such this question is answered accordingly in favour of the Revenue and against the assessee. With regard to the expenses incurred towards m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 30 to 38', the amounts mentioned in several clauses therein shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession'. Clause (a) contains several sub-clauses. We are concerned with sub-clause (v) alone. The main limb of sub-clause (v) places a limit upon two kinds of expenditure, viz., (a) any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite whether convertible into money or not, to an employee (including any sum paid by the assessee in respect of any obligation which but for such payment would have been payable by such employee) or (b) any expenditure or allowance in respect of any assets of the assessee used by suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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