TMI Blog1991 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... e years and the other question, referred at the instance of the assessee, relates only to the assessment year 1981-82. Similarly, one question has been referred, at the instance of the Revenue, for all the assessment years and a different question has been referred relating to the two assessment years (1980-81 and 1981-82). So, the questions referred at the instance of the assessee and at the instance of the Revenue are as follows : A. The questions referred at the instance of the assessee, for the assessment years 1979-80, 1980-81 and 1981-82 : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that (i) educational allowance ; (ii) servants' allowance ; and (iii) leave travel allowance be treated as perquisites for the purpose of computing the disallowance under section 40A(5) of the Income-tax Act?" For the assessment year 1981-82 only : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest paid on housing loan for the purpose of construction of employees' quarters was not deductible as being capital in nature?" B. The question referred at the instance of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e car as per rule 3(c)(ii) of the Income-tax Rules. For all the assessments, at the instance of the Revenue, a question has been referred to this court posing as to whether the Appellate Tribunal was right in holding that the perquisite value of the car provided by the assessee to its employees should be valued as per rule 3(c)(iii) for the purpose of disallowance under section 40A(5) of the Act. The decision relied on by the Income-tax Appellate Tribunal (I. T. A. Nos. 447 and 525/Coch/1983) was the subject-matter of a reference to this court in I. T. R. No. 172 of 1986. A Bench of this court to which one of us was a party rendered its decision on June 18, 1990. The decision is reported in CIT v. Malayalam Plantations (India) Ltd. [1990] 186 ITR 322 (Ker). Therein, this court held that the decision o the Appellate Tribunal in applying or relying on rule 3(c)(ii) of the Income-tax Rules and in directing the Income-tax Officer to value the perquisite of the car provided by the assessee to its employees as per the said rules cannot stand scrutiny due to non-consideration of the salient facts arising in the case and so this court declined to answer the questions referred to it ; but d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt with by the Appellate Tribunal in paragraphs 11 and 12 of its order. There is no proper evaluation or finding or adjudication as to whether the expenditure on maintenance of shade trees made is allowable in full, and if not, the quantum of disallowance called for. Since no independent consideration has been made by the Appellate Tribunal in accordance with law, we hold that the decision of the Appellate Tribunal deleting the entire disallowance of Rs. 20,955 is unjustified in law. The matter should be adjudicated afresh in accordance with law. We decline to answer the second question referred at the instance of the Revenue, relating to the assessment years 1980-81 and 1981-82, but direct the Income-tax Appellate Tribunal to restore the appeals to its file on that aspect and decide the matter afresh in accordance with law. The above two questions exhaust the three references (I. T. R. Nos. 27 to 29 of 1989) made to this court, at the instance of the Revenue. Now, we will take up the questions referred to this court, at the instance of the assessee, in I. T. R. Nos. 24 to 26 of 1989. Two questions have been referred in I. T. R Nos. 24 to 26 of 1989. One question is common fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made under section 40A(5) of the Act. The import of the two decisions in CIT v. Toshiba Anand Lamps Ltd. [1984] 145 ITR 563 (Ker) and Travancore Tea Estates Co. Ltd. v. CIT [1985] 153 ITR 444 (Ker) have not been properly adverted to. What is more, its own earlier decision in the assessee's own case for the year 1978-79 (Order dated March 26, 1984, in I. T. A. No. 554(Coch) of 1980) relied on does not form part of the paper book and there is no knowing on what ground and on what basis and to what extent, the Tribunal held that the cash allowances received by the employees from the assessee are to be taken into account for the purpose of section 40A(5) of the Act. Though it is stated that educational allowance was specifically in dispute in the assessee's own case for the assessment year 1978-79, what was the decision rendered on that score by the order dated March 26., 1984, in I. T. A. No. 554(Coch) of 1980 is not stated. We are not in position to know the reasons or basis on which the Tribunal adjudicated that the educational allowance can be considered to be a perquisite under section 40A(5) of the Act and even so, was it so held in the assessee's own case for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aspect has a bearing on the further question as to whether the capital was borrowed for the purpose of business or otherwise. Without adverting to that fundamental fact, the Appellate Tribunal has surmised that the assessee took a house building loan for construction of residences for the employees which was not capital borrowed for the purpose of business. Moreover, there is no discussion about the decision of the Supreme Court brought to its notice State of Madras v. G. J. Coelho [1964] 53 ITR 186. We should say that the finding of the Appellate Tribunal that the house building loan was taken for construction of a capital asset, i.e., residences for the employees, and so the interest paid is of a capital nature and rightly disallowed, is perfunctory and the finding and conclusion in that regard have been arrived at without investigating as to in what circumstances the assessee provided quarters for the employees and whether the quarters were provided in pursuance of any legal obligation. We are of the view that an investigation and finding on that aspect will go a long way in evaluating and finding whether the loan was taken for the purpose of business or otherwise. In so far a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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