Law: Income Tax Act, 1961

Section: 40,40A,40A(5),40(c),256

Income-tax---Reference---Business expenditure---Company---Disallowance of expenditure--- Perquisites to directors and employees---Insurance premia paid by company on behalf of employee-director---Whether could be disallowed under S. 40A(5) or 40(c) for assessment years 1979-80, 1980-81 and 1981-82---Question of law---Indian Income Tax Act, 1961, Ss. 40, 40A & 256. Held, that the question whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the premia paid by the assessee on behalf of the employee-director formed part of "salary" and was allowable as deduction from computing the assessable income of the company and not "perquisite", disallowable under section 40(A)(5) or section 40(c) of Income Tax Act, 1961, for the assessment years 1979-80, 1980-81 and 1981-82 was a question of law which had to be referred to the High Court. THIS ORDER PASSED BY : We are concerned with the assessment years 1979-80 to 1981-82, The question itself indicates the relevant facts. It reads thus: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the premia paid by the assessee on behalf of the employee-­director formed part of…

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