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TMI Blog1995 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(c) of the Act ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the amount of Rs. 25,125 paid as foreign exchange difference arising out of deferred payment of purchase price of machinery, was capital expenditure ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no depreciation is admissible in respect of machinery installed in earlier years for scientific research and development ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the payment of surtax is not admissible expenditure while computing the total income ? (5) Whether, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the residence of two managing directors and two other employees totalling to Rs. 12,834. Out of this amount, the Income-tax Officer has included half of the amount of telephone bills paid by the company in computing the remuneration, salaries, perquisites, benefits and amenities provided to these persons for the purposes of section 40(c) in the case of directors and section 40A(5) in case of employees for calculating maximum limit up to which remuneration paid to these persons could be considered as allowable expenditure. The order was confirmed by the Commissioner of Income-tax (Appeals). However, the Tribunal following its earlier decision in respect of the assessment year 1974-75 relating to the same assessee had accepted the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indirectly in the provision of any remuneration or benefit or amenity to a director or to a person who has a substantial interest in the company or to a relative of the director or of such person, as the case may be, (ii) any expenditure or allowance in respect of any assets of the company used by any person referred to in sub-clause (i) either wholly or partly for his own purposes or benefit ; if in the opinion of the Assessing Officer any such expenditure or allowance as is mentioned in sub-clauses (i) and (ii) is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom, so, however, that the deduction in respect of the aggregate of such expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the Tribunal that there was no evidence that telephone was installed at the residence of the managing directors to give benefits or amenities to the persons. In the face of this finding there cannot be any application of the provisions of section 40A(5) or section 40(c) resulting in direct provision of remuneration, benefit, amenity or perquisite in favour of the said category of persons. So far as the question whether by providing of telephone facility at the residence of the directors and the employees any indirect benefit has been made available to these persons, the Tribunal has not recorded any finding. Without any such finding in favour of the Revenue or against the assessee, the provisions of section 40A or 40(c), in our op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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