Law: Income Tax Act, 1961

Section: 40A

(a) Income-tax-----Business expenditure---Disallowance of expenditure above prescribed limit---Expenditure resulting in benefit or perquisite to employees--¬Expenditure on maintenance of houses owned by assessee-company and flats hired by it for housing senior officers ---Expenditure would amount to benefits or perquisites for purposes of S.40-A(5)---Indian Income-tax Act, 1961, S.40-A. The expenditure incurred by a company on the maintenance of houses owned by it and flats hired by it for housing senior officers amounts to benefits or perquisites for purposes of: section 40-A(5) of the Income Tax Act, 1961. Lubrizol India Ltd. v. CIT (1991) 187 ITR 25 (Bon.) fol. (b) Income-tax--- ----Advance tax---Interest payable by Government---Interest payable up to date of regular assessment for assessment years 1973-74 and 1974-75--¬Indian Income Tax Act, 1961, S.214. For the assessment years 1973-74 and 1974-75 interest under section 214 of the Income Tax Act, 1961, is payable up to the date of regular assessment. Modi Industries Ltd. v. CIT (1995) 216 ITR 759 (SC) applied. (c) Income-tax--- ----Interest on securities---Business income or interest on securities--¬Discount on treasury bills is assessable as interest on securities---Indian Income Tax Act, 1961. The discount on treasury bills is assessable as interest on securities. British Bank of the Middle East v. CIT (1998) 233 ITR 251 (Bom.) fol: Rayon Traders (P.) Ltd. v. ITO (1980) 126 ITR 135 (Mad.) ref. JUDGMENT S. H. KAPADIA, J.---By this reference under section 256(1) of the Income Tax Act, 1961, the Income-tax Appellate Tribunal has referred the following questions of law for the opinion of this Court at the instance of the Department in respect of the assessment years 1973-74 to 1974-75. Questions proposed by the Revenue: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law, in holding that the expenditure of the company on the maintenance of flats owned by the assessee for housing senior officers and the flats hired for them did not amount to benefit or perquisites for the purposes of section 40-A(5) of the Income Tax Act, 1961? (2)Whether, on the facts and in the…

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