Law: Income Tax Act, 1961

Section: 32A,40(c)

(a) Income-tax----Investment allowance---Foreign exchange---Additional cost of imported assets due to fluctuation in rate of exchange---Deduction not allowable on such additional cost---Indian Income Tax Act, 1961, S.32-A. (b) Income-tax--- ----Business expenditure---Disallowance-- -Company---Remuneration to Director--- Remuneration includes commission for purposes of S.40(c)--¬Indian Income Tax Act, 1961, S.40(c). (c) Income-tax--- ----Appeal to Appellate Tribunal---Powers of Tribunal---Tribunal has power to admit additional grounds---Indian Income Tax Act, 1961. The Tribunal has power to admit an additional ground. Ahmedabad Electricity Co. Ltd. v. CIT (1993) 199 ITR 351 (Bom.) fol. Remuneration includes commission for purposes of application of section 40(c) of the Income Tax Act, 1961. Godavari Sugar Mills Ltd. v. CIT,(1994) 208 ITR 801 (Bom.) fol. The assessee is not entitled to investment allowance under section 32-A of the Income Tax Act, 1961, in respect of additional cost of the imported assets which has taken place because of the fluctuation in the rate of exchange in the year subsequent to the year of acquisition. JUDGMENT DR. B.P. SARAF, J.---By this reference under section 256(1) of the Income Tax Act, 1961, following three questions have been referred by the Tribunal at the instance of the assessee to this Court for opinion: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in refusing to admit the additional ground, namely, whether the remuneration paid to the directors was covered by section 37 of the Income Tax Act and not by the provisions of section 40(c), in view of the fact, the Income-tax Officer had not given the requisite finding under section 40(c) of the Income Tax Act? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that remuneration included commission for the purposes of the…

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