Law: Income Tax Act, 1922

Section: 10(2)(xvi),66(2)

Law: Income Tax Rules, 1922

Section: 40

Income-tax Act (XI of 1922)---Ss.10 (2) (xvi) & 66 (2)--Income-tax Rules, 1922, R.40--Reference--Non. resident assessee --Head Office expenses--Admissibility--Reasonableness of Head Office expenses-- Adjudication--Income-tax Officer is competent to adjudicate upon the question whether sums claimed by the assessee were admissible or not as expenses m terms of S.10 (2) (xvi) and assessee is entitled to a reasonable amount of Head Office expenses as a non-resident--High Court while exercising its advisory jurisdiction cannot set aside the finding of fact by Income-tax Officer, Appellate Assistant Commissioner or Income-tax Appellate Tribunal unless it is found to be perverse. Rule 40 of the Income-tax Rules, 1922 is not directly applicable to the question, whether a particular portion of the amount of Head Office expenses is to be allowed or is not to be allowed. The question whether a particular sum claimed by a non-resident assessee in respect of its Head Office expenses is reasonable or not is a question, which has to be adjudicated upon by the Income ¬tax Officer, by the Assistant Appellate Commissioner and by the Income-tax Appellate Tribunal as a question of fact. There is no such thing as a fixed amount of expenses allowable in respect of the Head Office expense. Income Tax Tribunal was competent to adjudicate upon the question whether the sums claimed by the assessee were admissible or not as expenses in terms of section 10 (2) (xvi) of the Act, and therefore, High Court while exercising advisory jurisdiction cannot set aside the above finding of fact unless it is found to be perverse. Assessee was entitled to a reasonable amount of Head Office expenses as non-resident assessee. JUDGMENT AJMAL MIAN, C.J.--By this common judgment we intend to dispose of the above three Income Tax References. It may be pertinent to observe that I.T.C. No.107/79 referred to the Assessment year 1973-74, I.T.C. No.105/1979 pertains to the assessment year 1974-75 and I.T.C. No.108/1979 relates to the assessment year 1975-76. In all the above references the following question has been raised:- "Whether on the facts and in the circumstances of the case there was only material…

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