Commissioner of Income Tax vs Coca Cola Export Corpn.

Sharma, J.—The Tribunal has, at the instance of the revenue, referred the following question for our opinion u/s 256(1) of the income tax Act, 1961 (''the Act'') relevant to the assessment year 1969-70 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of section 40A(5) of the income tax Act, 1961 do not apply to the cash allowances paid for meeting house rent and car expenses and, thereby confirming the deletion of the disallowance of Rs. 6,522 made u/s 40A(5) of the Act ?"

A similar question relevant to the assessment year 1970-71 in the case of the present assessee itself came up for consideration before this Court in IT Reference No. 64 of 1976. The question which was referred to in the said IT Reference was on the following terms :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the cash allowance of Rs. 39,393 given by the company to its employees on account of house rent and car did not fall under the purview of section 40A(5) of the income tax Act, 1961 ?"

This Court while answering the aforesaid question referred to it found that there has been a difference of opinion between various High Courts as to whether the provisions of the said section apply to amenities, benefits, and perquisites paid in kind and cash payments. This Court, on consideration of the decisions of the various High Courts in the issue found that the unanimous view of the High Courts has been that cash payments are not covered by the words ''any benefit, amenity or perquisites'' occurring in the provision, and this is made clear by the words ''whether convertible into money or not'' occurring in the section. This Court while answering the aforesaid question came to the conclusion that the said question is covered by a decision of this Court in the case of Installment Supply P. Ltd. Vs. Commissioner of Income Tax, New Delhi, wherein one of us (D.P. Wadhwa, J.) delivering the judgment held that the provision does not cover cash payments. Following the ratio of the aforesaid decision in the case of installment Supply (P.) Ltd. (supra), this Court held that the answer to the question referred to this Court has to be in the affirmative to the effect that the Tribunal was right in holding that the cash allowance given to its employees on account of house rent and car did not fall within the purview of section 40A(5) of the Act. Similar view on the question was taken in a subsequent decision of this Court in case of Commissioner of Income Tax Vs. Shriram Refrigeration Industries Ltd., . Following the aforesaid views expressed by this Court in the aforesaid decisions and in the decision of the assessee''s own case for the assessment year 1970-71 we hold that the answer to the question referred to us has to be in the negative and in favour of the revenue. The petition is disposed of accordingly.