2002 (11) TMI 319 - AT - Income Tax

Summary

Issues involved:
1. Disallowance of 10% of staff welfare and 1/3rd of other expenses.
2. Deduction under section 80L of the Income-tax Act, 1961.
3. Levy of interest under section 234B of the Act.

Analysis:

Issue 1: Disallowance of 10% of staff welfare and 1/3rd of other expenses:
The appeal involved cross appeals by the assessee and the revenue against the CIT(A)'s orders for the assessment year 1990-91. The Assessing Officer disallowed a portion of staff salary and other expenses, which the CIT(A) partially upheld. The assessee contended that the staff salary payment was legitimate and not excessive, while the disallowance of other expenses lacked specific instances and evidentiary support. The Revenue argued against granting any relief. The ITAT found no basis for the disallowance of 10% of staff salary and reduced the disallowance of other expenses to Rs. 50,000 based on vague observations, deleting the balance addition.

Issue 2: Deduction under section 80L of the Income-tax Act, 1961:
Regarding the deduction under section 80L, the ITAT directed the Assessing Officer to reevaluate the case in light of the jurisdictional Bench's decision and make a determination after verifying the facts presented.

Issue 3: Levy of interest under section 234B of the Act:
The ITAT addressed the levy of interest under section 234B as a consequential matter, instructing the Assessing Officer to recalculate any interest based on the income determined per their order.

In conclusion, the ITAT partly allowed the assessee's appeal, deleting the disallowance of 10% of staff salary and reducing the disallowance of other expenses. The appeal by the revenue was dismissed, upholding the relief granted by the CIT(A) regarding staff salary and other expenses. The ITAT's decision provided clarity on the disputed issues and directed further examination on the deduction under section 80L and the interest levy under section 234B.