2018 (9) TMI 225 - HC - Income Tax

Disallowance of expenditure for security at tea gardens - Held that - If less expenditure has been disallowed or the entire expenditure has not been disallowed, it is, in our opinion, a plain and simple question of fact. On the alleged failure to make disallowance, we do not find any perversity involved. A remedy if, at all, lay in a further appeal on a question of fact. But the law does not allow any such further appeal. Under Section 260A, we cannot allow this question to be raised. Payment of alleged rent to Dakorji Properties Pvt. Ltd - premises not been transferred to Dakooji Property Pvt. Ltd. by the actual owners of the property, a dispute was going on and the keys of the premises were lying with the police ? - Held that - We find on an examination of the order of the Tribunal that all these factual issues have been answered in favour of the assessee. Now, when these facts are in favour of the assessee, it is not within the domain of a Court exercising jurisdiction under Section 260A to enquire into the correctness of that fact finding and return a contrary finding that the assessee was not a tenant, and was not in using the premises for business purposes, overturning the ruling of the Tribunal. Benefit conferred on the employees on superannuation or was a retirement benefit - We find on examination of the order of the Tribunal that its decision was based on BHARAT EARTH MOVERS VERSUS COMMISSIONER OF INCOME-TAX 2000 (8) TMI 4 - SUPREME COURT where held that the liability was not a contingent liability. In that case, the Supreme Court was concerned with beneficiary schemes for encashment of leave of the assessee company Bharat Earth Movers. In this case a scheme for medical benefit post retirement was involved. The tribunal treated the liability as accrued and to be discharged in the future, based on the above Supreme Court decision. In our opinion, this finding of the tribunal is based on standard accounting principles and consequential application of the law - no infirmity in the reasoning or conclusion reached by the Tribunal.

Summary

Issues Involved:
1. Disallowance of expenditure for alleged security at tea gardens.
2. Disallowance of payment for alleged supply of organic manure.
3. Disallowance of payment of rent to a specific entity.
4. Classification of interest received as "Profits and Gains of Business."
5. Allowance of provisions for post-retirement benefits.
6. Allowance of ex gratia payment as compensation to retired employees.

Analysis:
1. The first issue raised concerned the disallowance of a portion of expenditure claimed for security at tea gardens. The Court found that this was a factual matter and not a substantial question of law. The appeal was dismissed as the law did not allow further appeal on this issue.

2. The second issue involved the payment made for organic manure supply. The Court deemed this as another factual matter without any perversity in the finding, thus not attracting Section 260A for appeal.

3. The third issue revolved around the payment of rent to a specific entity. The Court examined the application of Section 30 of the Income Tax Act, which allows deductions for premises used for business. The Court upheld the Tribunal's findings favoring the assessee, stating that it was not within their jurisdiction to overturn these factual determinations.

4. The fourth issue dealt with the classification of interest received as "Profits and Gains of Business." The Court noted that this point was not seriously contested, referencing a previous decision.

5. The fifth issue was regarding the provisions made for post-retirement benefits. The Court clarified that the issue raised did not align with the arguments presented, and the Tribunal's decision was based on established accounting principles and previous legal precedents.

6. The final issue concerned the ex gratia payment made as compensation to retired employees. The Court reiterated that such matters involving questions of fact should not be entertained in the appeal and subsequently dismissed the appeal under Section 260A without costs.