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TMI Blog2001 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... not hit by the aforesaid section?" The assessment years with which we are concerned in these cases are 1985-86 and 1986-87. General Electric Company of India Ltd. is the assessee. While computing the income of the assessee, the Commissioner of Income-tax found that the assessee had incurred a sum of Rs. 1,48,584 by way of expenditure on public taxies (metered taxies) when the employees of the assessee were on tour. The Commissioner of Income-tax noticed that the expenditure had not been taken into account for the purpose of making disallowance under section 37(3A) of the Act. He was of the view that inasmuch as the expenditure had not been included in the expenditure to be considered for disallowance under section 37(3A), the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn), cannot be said to have any application in the present case as it would be evident from the facts of that decision that the expenditure incurred by the employer by way of conveyance allowance, would fall within the provisions of section 37(3A) of the Act. Dr. Pal submitted that in the present reference cases this was not the position. As noted hereinabove, Dr. Pal contended that the question that was raised in the aforesaid Karnataka High Court decision was whether the expenditure incurred by an employer by way of conveyance allowance would fall within the provision of section 37(3A) of the Act whereas in the present reference cases the question that would be decided is whether the expenditure incurred on metered taxies would fall with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Act with which we are concerned in this case. Chapter IV deals with computation of total income. Clause D of this Chapter deals with profits and gains of business or profession. Sections 30 to 36 of the Act deal with instances where assessees are entitled to deduction. Section 37 is a general provision. It says that any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly or exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". Section 37(3A) of the Act as on April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce paid to employees and, where the assessee is a company, conveyance allowance paid to its directors also." In our view, after considering the above relevant provisions of the Act on the question formulated above we are of the view that the expenditure incurred on metered taxies is inclusive of expenditure on running and maintenance of aircraft and motor cars. Section 37(3A) clearly says that where any expenditure incurred by an assessee on any one or more of the items specified in sub-section (3B) exceeds Rs. 1,00,000, 20 per cent. of such excess shall not be allowed as deduction in computing the income chargeable under the head "Profits and gains of business or profession." We also noted hereinbefore that in the present reference cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture incurred on metered taxies can include the expenditure on running and maintenance of motor cars. In our view, Explanation (c) given in clause (ii) of section 37(3B) of the Act cannot be brought into action in a case of metered taxies because it is neither an expenditure incurred on hire charges for engaging cars plying for hire nor it was a conveyance allowance paid to employees. It is an expenditure incurred for travelling in a metered taxi which is totally a different concept altogether. In the case of CIT v. Mahindra Ugine and Steel Co. Ltd. [2001] 250 ITR 696, a Division Bench of the Bombay High Court clearly held that in fact section 37(3B) refers to an expenditure incurred on running and maintenance of motor cars. While conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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