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[2008] 304 ITR 371 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA Mahavir Spinning Mills Limited v. Commissioner of Income-tax M. M. KUMAR AND RAJESH BINDAL, JJ. INCOME-TAX REFERENCE NOS. 102 AND 103 OF 1992 JANUARY 16, 2008 Section 40A(5) of the Income-tax Act, 1961 - Business disallowance - Remuneration, etc., paid in excess of prescribed limits in case of company etc. [A.Y. 1981-82]. The commission paid to the director cannot be held to be a perquisite for the purpose of the limits prescribed under section 40A(5). Further the payment of account of rent, electricity, water and fuel bills shall not be considered as perquisite for the purpose of section 40A(5). Section 80HH of the Income-tax Act, 1961 - Deductions - Profits and gains from hotels or industrial undertakings etc., in backward areas Deduction under section 80HH is not allowable without deducting investment allowance [A.Y. 1981-82]. For the reasons stated in CIT v. Mahavir Spg. Mills Ltd. [2007] 293 ITR 492 (Punj. & Har.), deduction under section 80HH is not allowable without deducting investment allowance. Akshay Bhan for the Assessee. S.K. Garg Narwana for the Commissioner. JUDGMENT Rajesh Bindal, J.-By this order, we shall dispose of two references bearing Income-tax References Nos. 102 and 103 of 1992. The Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"),vide its common order dated May 22, 1990, arising out of I.T A. No. 683/Chandi/88 and I.T.A. No. 734/Chandi/88 has referred the following questions of law under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), for the assessment year 1981-82 for the opinion of this court : In I T.R. No. 102 of 1992: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that, although the provisions of section 40(c) are specific, the provision of section 40A(5) are applicable for the purpose of disallowance out of the director's remuneration ? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in treating the amount of commission paid to the director and the amounts of rent, electricity, water and fuel bills paid by the directors…

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