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Issues Involved:
The judgment addresses the following Issues: 1. Whether the Appellate Tribunal correctly upheld the jurisdiction of the Commissioner of Income-tax in revising the order under section 263? 2. Whether the Commissioner of Income-tax had the power to revise the decision of the Inspecting Assistant Commissioner under section 263? 3. Whether the order of the Commissioner of Income-tax under section 263 was within the limitation period? 4. Whether the sums of Rs. 50,000 and Rs. 1,01,485 were allowable as expenditure under section 37 of the Income-tax Act? Issue 1: Jurisdiction of Commissioner of Income-tax under section 263: The Commissioner of Income-tax exercised power under section 263, holding that certain amounts were not allowable expenditure. The High Court found that the Commissioner had the jurisdiction to revise the order of assessment if it was found to be erroneous and prejudicial to the interests of the Revenue. The Court noted that the Commissioner's jurisdiction was not challenged on the basis of lack of materials or relevance. Issue 2: Power of Commissioner to revise decision of Inspecting Assistant Commissioner: The Court affirmed that the Commissioner had the authority under section 263 to interfere with the order passed by the Income-tax Officer based on a direction from the Inspecting Assistant Commissioner. Citing a previous judgment, the Court held that the Commissioner could revise such orders. Issue 3: Limitation period for Commissioner's order under section 263: The Court determined that the order passed by the Commissioner was not barred by limitation. It explained that the time limit for revision should be computed from the date of the order sought to be revised, and in this case, the Commissioner's order was within the prescribed time limit under section 263. Issue 4: Allowability of expenditure under section 37: Regarding the deductibility of the sums of Rs. 50,000 and Rs. 1,01,485, the Court disagreed with the Tribunal's decision. It held that the contributions made by the assessee for the welfare of its employees were allowable as business expenditure under section 37 of the Act. The Court referenced a Supreme Court decision to support its conclusion that such contributions related to the carrying on of the assessee's business and were therefore deductible. In conclusion, the Court answered the questions of law as follows: 1. Affirmative and against the assessee. 2. Affirmative and against the assessee. 3. Affirmative and against the assessee. 4. Negative, in favor of the assessee and against the Revenue. The assessee was awarded costs of Rs. 750.
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