TMI Blog1998 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction was not challenged before the Commissioner of Income-tax ? (ii) Whether the Appellate Tribunal is right in law in holding that the Commissioner of Income-tax is within his powers under section 263 to revise decision of the Inspecting Assistant Commissioner while giving direction to the Income-tax Officer under section 144B and particularly in view of the decision in the case of East Coast Marine Products (P.) Ltd. (S.B.) I. T. A. T., Hyderabad [1983] 4 ITD 73 ? (iii) Whether the Appellate Tribunal is right in law in holding that the order of the Commissioner of Income-tax under section 263 is not barred by limitation under section 263(2)(b) of the Income-tax Act ? (iv) Whether the Appellate Tribunal in the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercising his power under section 263 of the Act, was of the opinion that the allowance of Rs. 50,000 being the transfer of the amount to a welfare fund and the payment of Rs. 1,01,485 made as gift to the employees for strike-free services were not allowable expenditure, and, therefore, he issued a show-cause notice to the assessee and, after hearing the objections preferred by the assessee, held that both the amounts should be regarded as bonus and the amount admissible as bonus exceeded the limit prescribed under section 36(1)(ii) of the Act, and the Income-tax Officer erred in allowing both the sums as a deduction. He directed the Income-tax Officer to disallow both the amounts and complete the assessment. The assessee challenging th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the order of the Income-tax Officer passed under section 143(3) read with section 144B of the Act. The Commissioner was of the opinion, that the order of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue and if he comes to such a conclusion on the basis of materials on record, he could properly exercise the revisional jurisdiction conferred upon him under section 263 of the Act and, therefore, we are of the opinion that it cannot be said that the Commissioner had lacked the inherent jurisdiction to revise the order of assessment. It is not the case of the assessee that there were no materials or that the materials available were irrelevant before the Commissioner assumed the jurisdiction under section 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have set out the facts earlier. The Income-tax Officer initially passed a draft assessment order and on the basis of the direction given by the Inspecting Assistant Commissioner under section 144B of the Act, the Income-tax Officer completed the assessment on the basis of his direction. Under section 153, Explanation 1(iv) of the Act, if the Income-tax Officer on July 3, 1981, is within the time limit prescribed under section 153 of the Act (sic). Under section 263(2)(b) of the Act, the Commissioner has the power to revise an order of assessment before the expiry of two years from the date of the order sought to be revised. The Income-tax Officer has passed the order of assessment on July 3, 1981, under section 143(3) read with section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has not enclosed a copy of the trust deed along with the statement of the case, it is not disputed that the trust was formed for the benefit of employees of the assessee. The Commissioner also has not disputed that the trust was formed for the benefit of employees of the assessee. The Commissioner also has not disputed the position that the trust was created for the welfare of the employees of the assessee. If the trust has been created for the welfare of the employees and any contribution was made by the assessee to the trust, in our opinion, it would in effect mean a contribution made by the assessee, for the welfare of the employees and, in our opinion, the contribution for the welfare of the employees is an allowable deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case, was made for its own employees welfare fund and the money was paid to the fund to secure to the assessee the benefit in carrying on the business of the assessee and, therefore, the amount paid can be regarded as a labour welfare expenditure and allowable as deduction under section 37 of the Act as the payments were made on the ground of the assessee's business exigencies. We are, therefore, of the opinion that the Tribunal was not correct in holding that the sum of Rs. 50,000 as well as Rs. 1,01,485 paid by the assessee cannot be regarded as a business expenditure. Accordingly, we answer the questions of law referred to us as under : The first question of law --- In the affirmative and against the assessee. The seco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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