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TMI Blog1996 (12) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee-company for depreciation @ 30% as against general rate allowed on electrical installation. The 5th ground relates to rejection of the assessee-company's contention that ' road ' should be treated as ' plant '. Let us deal with them in seriatim. 2. When the matter was posted for hearing on 18-9-1996, none appeared for the assessee, though the notice was sent through the Departmental Representative and though it was served against the assessee on 21-8-1996 as per the acknowledgement filed in this Tribunal and kept on record. As this is an old appeal of 1990 and since very many adjournments were already passed and since there is no representation whatsoever for and on behalf of the assessee, though it was served with notice for the hearing on 18-9-1996, there is no other go left with this Tribunal except to take up the matter and decide it on merits. 3. We have heard Smt. Geeta Subramanian, the ld. Departmental Representative. However, written submissions were found to have been filed on behalf of the assessee-company by its General Manager -- Accounts, Shri N.P. Upadhyay. The appeal relates to assessment year 1988-89 for which the previous year ended by 31-12-1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance under section 40A(5) to the extent of Rs. 22,47,877 and added it to the total income of the assessee-company. Ground No. 1(a) : 4. Aggrieved against the assessment order dated 22-9-1989 passed by the Dy. Commr. of Income-tax, Spl. Rg. 23, Mumbai, under section 143(3), the assessee went in appeal before the CIT (Appeals). It was contended before him that medical expenses reimbursed to the employees were wrongly disallowed. Purporting to follow the order for assessment year 1987-88 in the assessee's own case by the first appellate authority, the learned CIT(A) held that the medical reimbursement is to be treated as part of salary. The matter is now concluded by the Hon'ble Supreme Court by its judgment delivered in the case of CIT v. Mafatlal Gangabhai & Co. (P.) Ltd. [1996] 219 ITR 644/85 Taxman 381. Interpreting the provisions of section 40A(5)(a)(ii), the Hon'ble Supreme Court held the following at page 653 : ' On a consideration of both the points of view, we are inclined to agree with the submission of learned counsel for the assessees. The language employed in the sub-clause is not capable of taking within its ambit cash payments made to the employees by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. (iii) Lubrizol India Ltd v. CIT [1991] 187 ITR 25 (Bom.). (iv) C.W.S. (India) Ltd v. CIT [1994] 208 ITR 649/73 Taxman 174 (SC), etc. Regarding house rent allowance, the Hon'ble Kerala High Court in Toshiba Anand Lamps Ltd.'s case held that house rent allowance is a part of salary and not a perquisite or amenity. In that case, the facts were that the assessee-company paid a sum of Rs. 80,000 as remuneration to its Mg. Director, who was an employee of the company, during assessment years 1972-73 and 1973-74. He was paid a remuneration of Rs. 80,000, the components of which are the following : Rs. 60,000 : by way of salary. Rs. 15,000 : as house rent allowance. Rs. 5,000 : by way of payments relating to electricity, gas, etc. The question was whether the excess of Rs. 5,000 p.m. was liable to be disallowed under section 40A(5)(c)(i). In that case, before the Tribunal it was contended that house rent allowance should not be considered as part of salary. The Tribunal observed that in that case HRA was a perquisite and held that 20% of the salary subject to a maximum of Rs. 12,000 could be granted as allowance and restricted the disallowance to Rs. 8,000. On a reference, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd.'s case. In the said decision, the Bombay High Court held that the expenditure incurred on repairs of the assessee's own flats and the flats taken by it on lease and used by its employees for residence is to be considered for disallowance under section 40A(5) of the Income-tax Act, 1961. They followed the decision of the Kerala High Court in CIT v. Forbes, Ewart Figgis (P.) Ltd [1982] 138 ITR 1/[1981] 7 Taxman 32 (FB). Thus, in a case where the flat belongs to the company but which was allotted to the employee for his residence or in a case where the company takes itself a flat on rent and gives it to the employee on rent, if any expenditure is incurred for maintenance of such a flat, the same should be considered for disallowance under section 40A(5). In this connection, we may refer to C.W.S. (India) Ltd.'s case, etc., which provides authoritative reason for arriving at such a conclusion. At page 650, a part of the head-note would give the ratio of the decision as follows:--- " The ceiling provided in section 40(a)(v) of the Income-tax Act, 1961, applies even to expenditure in relation to an employee using the assets of the assessee-employer for his own purpose or benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployee. The Tribunal found the reasoning of the ld. CIT(A) quite legal and felt worthy to be upheld in view of the Bombay High Court's decision in Bombay Burmah Trading Corpn. Ltd. 's case. Therefore, for the same reasons, we hold likewise for the assessment year 1988-89. Ground No. 1(i) : 9. The constitutional validity of sections 40A(5) and 40(c) was attacked. Since this Tribunal is the creature of the Income-tax Act, the constitutionality or otherwise cannot be dealt with by it and hence this ground is to be rejected. Ground No. 2(a) : 10. From the order of the Assessing Officer, it would appear that the total expenses incurred by the assessee company towards holding seminars and conferences were Rs. 84,833. Out of the total, 15% of the expenditure was disallowed as entertainment expenditure on estimate basis. That means he has disallowed Rs. 34,833 and allowed only Rs. 50,000 as deduction. Purporting to follow the appellate order in the assessee's own case for the immediately preceding year dated 12-12-1989, the ld. CIT(A) held that the claim of the assessee cannot be accepted as it was conceded that the issue had been decided against the assessee in the immediately pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal before the CIT(A). The ld. CIT(A), in his impugned order, stated that no acceptable argument or authority has been shown to prove any infirmity in the Assessing Officer's order and hence he did not accept the contention of the assessee in his impugned orders. This issue is decided against the assessee by Bombay Bench ' B ' of the Tribunal in assessment year 1984-85 with the following reasoning :--- " 32. The next ground in the assessee's appeal relates to the claim of depreciation @ 30% in respect of electrical installation to boiler. The Department has allowed depreciation at 15% in respect of this item. According to the assessee, depreciation at 30% is to be allowed. The assessee has not filed full details of the assets disputed by the Department as not entitled to depreciation at 30%. Under these circumstances, we confirm the order of the CIT(A) on the issue." In this year also, the situation remains the same and the particulars of the assets, according to which the assessee is entitled for depreciation of 30%, are not provided for either before the lower authorities or before this Tribunal. Hence, the disallowance of the higher claim of depreciation is rightly reject ..... X X X X Extracts X X X X X X X X Extracts X X X X
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