Law:

Section:

Section 40(c) of the Income-tax Act, 1961 - Business disallowance - Remuneration, etc., paid in excess of prescribed limit in case of company, etc. - Whether Tribunal was right in law in considering commission paid to managing director as perquisite for purpose of section 40(c) - Held, yes Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Whether legal and professional expenses in respect of amalgamation of sister concern with assessee-company were allowable as revenue expenditure - Held, yes Section 37(3B) of the Income-tax Act, 1961 - Motor car expenditure - Whether Tribunal was right in law in holding that a sum of Rs. 20,000 out of motor car expenses was not disallowable as personal and non-business use of motor car in hands of assessee - Held, yes CASES REFERRED TO CIT v. Rohit Mills Ltd. [1996] 219 ITR 228 / 85 Taxman 532 (Guj.) [Para 4], CIT v. Bombay Dyeing & Mfg. Co. Ltd. [1996] 219 ITR 521 / 85 Taxman 396 (SC) [Para 5] and Sayaji Iron & Engg. Co. v. CIT [2002] 253 ITR 749 / 121 Taxman 43 (Guj.) [Para 7]. J.P. Shah for the Applicant. Manish R. Bhatt for the Respondent. JUDGMENT A.R. Dave, J. - At the instance of the assessee, the following questions arising out of the order passed by the Income-tax Appellate Tribunal, Ahmedabad Bench "B" have been referred to this Court for its opinion under the provisions of section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') : At the instance of the assessee : "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in considering the commission paid to the Managing Director as the perquisite for the purpose of section 40(c) of the Act ? 2. Whether, on the facts and in the circumstances of the case, legal and professional expenses of Rs. 22,518 in respect of amalgamation of the sister concern with the assessee-company is allowable revenue expenditure or capital expenditure ?" 2. Mr. J.P. Shah, learned Advocate has appeared for the assessee and Mr. M.R. Bhatt, learned Standing Counsel has appeared for the revenue. 3. Learned Counsel have submitted that the questions which have been referred to this Court have…

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