Law: Income Tax Act, 1961

Section: 32

(a) Income-tax-----Depreciation---Rate of depreciation---Higher rate---Machinery coming into contact with corrosive chemicals---Sugar industry---Iron, lead and copper are not corrosive chemicals---Machinery coming into contact with iron, lead and copper---Not entitled to depreciation at 15 per cent.---Indian Income Tax Act, 1961, S.32. (h) Income-tax--- ----Business expenditure---Disallowance---Perquisites to employee---Monthly medical expenses paid to Managing Director amounts to perquisites--Liable to be disallowed--- Indian Income Tax Act, 1961, S.40-A(5). Held, (i) that even if it were accepted for the sake of argument that iron, lead and copper persist in the composition of molasses, it cannot be said that the machinery comes into contact with corrosive chemicals for the simple reason that it is not possible to take the view that iron, lead and copper constitute corrosive chemicals. On the facts and in the circumstances of the case, the Tribunal was right in law in rejecting the assessee's claim of depreciation at the rate of 15 per cent. on the machinery, in question; Gwalior Sugar Co. (P.) Ltd. v. CIT (1989) 178 ITR 415 (MP) and CIT v. Saraswati Industrial Syndicate Ltd. (1982) 136, ITR 758 (P&H) fol. (ii) that sums paid as medical expenses to the Managing Director would fall within the definition of "perquisites" in view of section 17(2) of the Income Tax Act, 1961, as it was not an amount which was incurred by the. employer on the treatment of the Managing Director or 'any member of his family in any hospital maintained by the Government or by the employer. It would be covered by section 40-A(5) of the Income Tax Act, 1961, and had to be taken into account for purposes of disallowance in the assessment years 1974-75 and 1977-78. JUDGMENT S.K. DUBEY, J.---At the instance of the assessee, the Income-tax Appellate Tribunal, Delhi, Bench-E(5), has referred under section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), for the opinion of this Court the following questions: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in treating the medical expenses of Rs.1,506 as perquisite and disallowing…

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