1989 (7) TMI 3

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ing question of law has been referred to this court "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting Rs. 43,700 added by the Income-tax Officer under section 40A(5) of the Income-tax Act, 1961, on the sale of the assessee-company's motor cars to its employees at concessional rate ? " The facts relating to this reference are that the assessee s .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ncurred in the said case during the relevant year. In other words, the company did not incur any expenditure, directly or indirectly, in Providing any perquisite to the employees. The Tribunal also upheld the decision of the, Commissioner of Income-tax (Appeals). Section 40A(5) of the Act applies only in a case where the assessee incurs any expenditure which results directly or indirectly in t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the earlier years between 1967 and 1971. Hence, the essential condition for the application of section 40A(5) of the Act is not satisfied in the present case. Reference may, in this connection, be made to the decision of the Madras High Court in CIT v. A. K. Subbaraya Chetty and Sons [1980] 123 ITR 592. In that case, the assessee-firm sold goods to another firm in which one of the partners of t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ad accrued to it, there was no " expenditure " which could be disallowed under section 40A(2)(a) of the Act. In other words, when the assessee was charging the price after allowing the discount of six per cent., the allowance of discount of six per cent. did not constitute an expenditure and, hence, section 40A(2)(a) of the Act could not be made applicable. The same view has been taken by the Ma .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Act. In our view, the same reasoning would be equally applicable in the present case. When the assessee in the present case is selling the old cars at their written down value, there is no expenditure incurred by the assessee during their relevant year which could be said to have resulted in the provision of any perquisite. Hence, section 40A(5) of the Act cannot have any application. For the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X