TMI Blog1998 (3) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co., and for the services of such employees being utilised, it reimbursed the holding company of the expenses incurred therefor by way of payment of salaries to such employees. The assessment years involved are 1979-80 and 1980-81, for which the respective calendar years are the accounting years. The assessee claimed reimbursement as deductible expenses, while computing the total income, for those assessment years, which amounted to Rs. 1,48,587 and Rs. 1,44,471 respectively. The Income-tax Officer allowed the claims of the assessee. The Commissioner of Income-tax, Madras, in exercise of the powers of revision under section 263 of the Income-tax Act, 1961 (Act No 43 of 1961 for short "the I. T. Act"), examined the record and fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of reimbursement charges paid to the holding company for the assessment years 1979-80 and 1980-81 ?" The question under reference, we are of the view, had been wrongly framed, in the sense of not bringing about the real controversy between the parties. The question so posed makes it appear that the Commissioner of Income-tax (for short "the CIT") disallowed the assessee's claim for deduction of reimbursement charges paid to the holding company for the assessment years 1979-80 and 1980-81 and disallowance so made was lately confirmed by the Tribunal, on appeal. That is not the reality of the situation. What the Commissioner of Income-tax did was that he, in exercise of the powers under section 263 of the Income-tax Act, found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw cannot mean any way other than the expenditure incurred for the services rendered by the holding company, as is considered by him to be excessive and unreasonable, not having been allowed as a deduction in the computation of the income of the assessee. From what has been stated above, it is thus crystal clear that the question under reference is not at all bringing out the real controversy in existence between the parties and so, the question requires to be reframed, in the light of the factual matrix of the case bringing out the controversy between the parties. The question to be reframed is to read as under : "Whether the Tribunal was right in confirming the order of the Commissioner of Income-tax cancelling the order of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner be equated to or regarded as approaching in any way the appellate jurisdiction or even the ordinary revisional jurisdiction conferred on the Commissioner under section 264 of the Income-tax Act. Mrs. Chitra Venkataraman, learned junior standing counsel representing the Revenue would strike a discordant note to the hues of views, as projected by learned counsel appearing for the assessee and submit that the inaction on the part of the Income-tax Officer by non-application of his mind to the factual matrix of the case, in the light of the salient provisions adumbrated under section 40A(2), culminated in distortions and prejudices to the Revenue and to set right such distortions and prejudices to the Revenue, the power under section 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him therefrom, then so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. In the instant case, the amounts paid by the assessee-company to the holding company by way of reimbursement in relation to the utilisation of the services of the employees of the holding company run to the tune of Rs. 1,48,587 and Rs. 1,44,471 for the assessment years in question respectively. The excessive nature of the claim or its unreasonableness or otherwise had not at all been taken into account by the Income-tax Officer, who was allowing such deduction in the computation of the income of the assessee and such a duty is expected to be performed by him by the salient provisions adumbrate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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