1991 (4) TMI 182 - AT - Income Tax

Summary

Issues:
1. Disallowance under section 43B of the IT Act, 1961.
2. Disallowance of payment to Advocate under section 80VV of the IT Act.
3. Disallowance of travelling expenses exceeding the limit prescribed under rule 6D of the IT Rules, 1962.

Disallowance under section 43B of the IT Act, 1961:
The appeal was against the disallowance of Rs. 3,18,711 under section 43B of the IT Act, 1961 by the CIT(A). The assessee had collected sales-tax under a scheme where payment was deferred for ten years in five equal installments. The Assessing Officer disallowed the amount as it was not actually paid. The assessee argued that a circular by the CBDT and a Tribunal decision supported treating deferred tax as paid. The ITAT held that compliance with the Board Circular and the insertion of sub-section (3B) of section 22 of the State Act meant the sales-tax was deemed paid, thus disallowance under section 43B was unwarranted. The addition of Rs. 3,18,711 was directed to be deleted.

Disallowance of payment to Advocate under section 80VV of the IT Act:
The next issue was the disallowance of Rs. 1,002 paid to an Advocate under section 80VV of the IT Act due to the assessee declaring a loss. The CIT(A) upheld the disallowance, stating it was not allowable as the payment was for consultation, not representation. The ITAT agreed, holding that section 80VV applied to expenditure for proceedings before authorities, not consultation fees. The assessee was entitled to the deduction of Rs. 1,002 under section 37 of the IT Act.

Disallowance of travelling expenses exceeding the limit prescribed under rule 6D of the IT Rules, 1962:
The final issue was the disallowance of Rs. 1,232 from travelling expenses exceeding the limit under rule 6D of the IT Rules, 1962. The Assessing Officer disallowed the amount, which was confirmed by the CIT(A). The assessee argued that the disallowance was mainly in respect of an employee, not a Director. After reviewing the details, the ITAT found merit in the assessee's submissions and directed the deletion of the disallowance. The appeal was allowed in this regard.