Law: Income Tax Act, 1961

Section: 37,37(3B),37(3A),256

Income-tax--Reference---Business expenditure---Ceiling on expenditure---Computation of expenditure for purposes of S. 37(3A)---Expenditure on maintenance of motor car---Tribunal correct in holding that driver's salary is not an expenditure on maintenance of a motor car---No question of law arose-­Indian Income Tax Act, 1961, Ss-37 & 256. Held, dismissing the application to direct reference, that a driver's salary can, if at all, be classified as "wages". A driver has to be paid salary irrespective of whether the motor car is driven or not. The Tribunal was correct in holding that a driver's salary will not come within the ambit of expenditure on maintenance of motor cars falling within clause (ii) of subsection (3B) of section 37 of the Income Tax Act, 1961. No question of law arose from its decision. JUDGMENT This tax case petition, at the instance of the Commissioner of Income-tax, Tamil Nadu II, Madras, is for issuance of a direction to the Tribunal to state a case and refer the question of law, as below, for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the driver's salary should not be taken into consideration, while making the disallowance under section 37(3A) of the Income Tax Act?" The Tribunal expressed the opinion that the answer to this question is self-explanatory and hence this question does not require a reference. We also feel the same way, as the Tribunal felt. Subsection (3A) of section 37 of the Income Tax Act, 1961 (Act No.43 of 1961, for short "the I.T. Act"), prescribes: "Notwithstanding anything contained in subsection (1), where the expenditure or, as the case may be, the aggregate expenditure incurred by an assessee on any one or more of the items specified in subsection (3B) exceeds one hundred thousand rupees, twenty per cent. of such excess shall not be allowed as deduction in computing the income chargeable under the head 'Profits and gains of business or profession'. " Subsection (3B) of section 37 of the Income-tax Act reads as under. "The expenditure, referred to in subsection (3A) is that incurred on--- (i) advertisement, publicity and…

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