9911796707
TMI Blog1989 (6) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... stated are that while making the assessment of the assessee for the said year on March 15, 1972, the Income-tax Officer disallowed Rs. 9,48,380 under section 40(a)(v) of the Act and on the basis of the claim made by the assessee allowed the deduction. In computing its income from business for that year, the sum of Rs. 1,40,411 being 1/12th of the expenditure on repairs, maintenance, etc., of bungalows and depreciation on bungalows, furniture, etc., owned by the assessee-company and used by its employees was allowed as a deduction. Later on, the Income-tax Officer was of the opinion that the deduction of the sum of Rs. 1,40,411 allowed to the assessee represented a mistake apparent on the record, inasmuch as the said deduction was not permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees near the site of the business. The, assessee had provided bungalows to the employees in Duliajan near Dibrugarh. The assessee had to incur the expenses on repairs for these bungalows. Since they were furnished bungalows, the expenses on repairs for wear and tear were higher. But the assessee claimed that the employees used to go on leave on an average for one month every year. The expenses were claimed as a deduction only for, the period of actual occupation or user. The Income-tax Officer, however, held that all these bungalows were in the constructive possession of the employees. The disallowance under section 40(a)(v) was, therefore, called for. He, accordingly, after taking all the facts of the case into account, disallowed the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to the employees. The provisions of section 40 (a) (v) are very clear in this regard. Then, in computing the expenditure, what is to be included is not the value of the perquisite, benefit or amenity as is assessable in the employees' hands, but the cost incurred in providing such benefit, amenity or perquisite. The fact remains that the expenses and allowances incurred and claimed by the company relate to the quarters, etc., which are meant for the use of the employees. It is immaterial so far as the position in law is concerned even if the employees go on leave for a month. Even according to the company's own admission, such quarters during the leave period of one employee is given to another member of the staff. On the facts which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , unless, of course, before proceeding on leave, his employment is terminated. The employees concerned may or may not occupy the bungalows physically during the period of their leave but this would not postulate a cessation of constructive possession of the bungalows by the employees. In the circumstances, as long as an employer incurs an expenditure for the whole year and there is no interruption in the employment during the period of leave of the employees, there can be no question of restricting the disallowance under section 40(a)(v) to 11/12th of the total expenditure otherwise disallowable. The objection raised in this ground, therefore, fails." The Tribunal held as follows: "We have given our thoughtful consideration to the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand to reason that when the employees go on leave, the bungalows are vacated and the household effects are also taken away by them or kept with some other employees occupying the other bungalows. But since the assessee has filed specific details, we admit the same, but it is not possible for us to give a decision thereon unless the facts are verified. Therefore, having regard to all the aspects of the case we deem it necessary to restore these two appeals to the Appellate Assistant Commissioner for fresh disposal. He will examine as to whether the details filed by the assessee are really correct and whether the expenses disallowed by the Income-tax Officer under section 40 (a) (v) are justified. While disposing of the appeals afresh, he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 40(a)(v) are justified. This direction may be construed to mean that the Tribunal found that there was a mistake apparent from the records. But the Tribunal did not decide although such an issue was raised whether the proceeding under section 154 was validly initiated. The Tribunal has, however, gone into the merits. The Tribunal should have first considered whether the Income-tax Officer rightly invoked section 154 and whether there was any mistake apparent from the records. Only thereafter, the determination of quantum of disallowance could have been left to the Income-tax Officer and the Appellate Assistant Commissioner. For the reasons aforesaid, we are of the view that the Tribunal's order in remanding the case to the App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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