Law: Income Tax Act, 1961

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

Income-tax---Reference---Business expenditure---Company---Disallowance of expenditure--- Amount paid as premium for purchase of deferred annuity policies in respect of Managing Director---Whether allowable---Question of law---Indian Income Tax Act, 1961, Ss. 40A & 256. Held, that the questions whether the Tribunal was right in law and on facts in deleting the addition under section 40A(5) of the Income Tax Act, 1961, in respect of premium paid for the purchase of deferred annuity policies in respect of the two Managing Directors and whether the Appellate Tribunal was right in distinguishing the decision of the Gujarat Steel Tubes Ltd. v. E.I.T. (1994) 210 ITR 358 (Guj.) were question of lam, to be referred to the High Court. C.I.T. v. Russel (L.W.) (1964) 53 ITR 91 (SC) and Gujarat Steel Tubes Ltd. v. C.I.T. (1994) 210 ITR 358 (Guj.) ref. THIS ORDER PASSED BY : The question raised in these three appeals, relating to three different sets of assessment years, are common. They read thus: "(i) Whether the Tribunal is right in law and on facts in deleting the addition under section 40A(5) of the Income Tax Act, 1961, in respect of premium paid for the purchase of deferred annuity policies in respect of two managing directors? (ii) Whether the Appellate Tribunal is right in distinguishing the decision of the Gujarat Steel Tubes Ltd.'s case (1994) 210 ITR 358?" It is difficult to understand why the Tribunal declined to refer these questions to the High Court. The High Court took the view that they need f not be referred because the issue was settled by the decision of the Supreme Court in…

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