1992 (10) TMI 71 - HC - Income Tax

Advance Tax Business Expenditure Disallowance Export Market Development Allowance Limit For Allowance Perquisite

Summary

Issues:
1. Interpretation of the definition of 'perquisite' under section 40A(5) of the Income-tax Act for reimbursement of medical expenses to employees.
2. Admissibility of weighted deduction for expenses like freight, dock charges, etc., paid in India under section 35B of the Income-tax Act.
3. Eligibility of weighted deduction for salary paid to a director for services performed outside India under section 35B(1)(b)(viii).
4. Legality of invoking section 154 of the Income-tax Act to withdraw interest allowed by the Income-tax Officer under section 214 for assessment years 1967-68 and 1974-75.

Analysis:
1. The first issue pertains to the interpretation of 'perquisite' under section 40A(5) concerning reimbursement of medical expenses to employees. The court referenced the decision in CIT v. Shriram Refrigeration Industries Ltd., where it was held that such reimbursements are not considered perquisites for calculating excess amounts for disallowance. Therefore, the court answered question No. 1 in favor of the assessee.
2. Regarding the admissibility of weighted deduction for expenses like freight, dock charges, etc., paid in India under section 35B, the court relied on decisions from various High Courts to conclude that such expenses are not entitled to weighted deduction. Therefore, the court answered question No. 2 in favor of the Department.
3. The issue of eligibility for weighted deduction for salary paid to a director for services performed outside India under section 35B(1)(b)(viii) was analyzed. The court found that the salary would have been payable to the director regardless of performing services outside India, thus not meeting the conditions for weighted deduction. Therefore, question No. 3 was answered in favor of the Department.
4. Lastly, the legality of invoking section 154 to withdraw interest allowed under section 214 for excess payment of advance tax was discussed. The court noted a difference of opinion between High Courts on the interpretation of "regular assessment" in section 214, leading to the conclusion that rectification cannot be made if two opinions are possible. Consequently, the court answered this question in favor of the assessee, deciding against the Revenue on this issue.