Law:

Section:

I. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1991-92 - Expenses on printing of balance-sheet and on printing and dispatch of dividend warrants are revenue in nature [In favour of assessee] Expenses incurred on printing of balance-sheet and on printing and dispatch of dividend warrant are incurred by the assessee for the compliance with the statutory requirement as prescribed under the Companies Act and are revenue in nature. II. Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments - Assessment year 1991-92 - Reimbursement of actual expenditure to sister concern cannot be disallowed under section 40A(2) [In favour of assessee] MRL allowed the assessee to use the flats taken by it on lease in Delhi, for the purpose of its business. The assessee reimbursed of rent paid by MRL to the landlord. For the premises in the occupation of the assessee-company, the assessee, further, reimbursed to MRL electricity, water, telephone charges, etc., relating to the user of such flats. The Revenue, by invoking the provisions of section 40A(2), disallowed the reimbursement of expenses on the ground that the reimbursement to MRL was excessive having regard to legitimate needs of the business of the assessee-company. On appeal, the Tribunal deleted the addition holding that what the assessee had paid was the amount of actual expenditure incurred by MRL. On revenue's appeal: Held that the Tribunal had arrived to a conclusion that the Assessing Officer had failed to prove by any comparable case or comparison by market rate that the amount paid by the assessee was excessive or unreasonable. The finding of the Tribunal was finding of fact. On the enquiry the Inspector found that the premise was in occupation and use of the assessee and the claim of the rent was not false. The Tribunal found that the assessee had paid the actual rent and reimbursed the actual expenditure incurred by MRL. The finding of the Tribunal was finding of fact, based on material on record and could not be said to be perverse. The order of the Tribunal was to be upheld. III. Section 43B of the Income-tax…

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