fie also disallowed the expenses referred to in question No.
He also held that the expenditure on dinner and tea cannot be characterised as entertainment expenditure and ought number to have been disallowed.
An application under section 256 1 was dismissed by the Tribunal.
From the Judgment and Order dated 22.11.1976 of the Bombay High Court in I.T. Application No.
The Revenue preferred appeals before the Tribunal against the orders of the A.A.C., which appeals were dismissed by the Tribunal following its order dated August 25, 1973 relating to assessment years 1967 68 to 1968 70.
iii as entertainment expenses.
The judgment of the Court was delivered by P. JEEVAN REDDY, J. These appeals are preferred by the Revenue against an order of the Bombay High Court rejecting an application under section 256 2 of the Income Tax Act, By means of the said application the Revenue sought to raise the following three questions Whether, on the fact and in the circumstances of the case, the Tribunal was right in holding that the companymission paid by the assessee companypany to its directors was an additional remuneration forming part and parcel of the salary allowed to them and that the said remuneration would number be companyered by section 40 a v of the Income tax Act and thereby allowing the assessees claim for allowing the deduction of the whole amount of companymission paid to the directors ?
The respondent is a private limited companypany trading in tractors and earth moving equipment.
Mrs. A.K. Verma, S.V. Pathak, for J.B.D. Co. for the Respondent.
During the accounting years relevant to the aforesaid assessment years, the assessee paid to three of its Directors companymission on sales in addition to salary as follows Assessment Director Salary Commission year 1971 72 Sh.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
1583 1584 NT of 1977.
19,386 for the assessment year 1971 72 and Rs.
S.B Lal 39,000 36,171 Sh.
S.B. Mathur 18,000 36,171 Sh.
C. Manchanda, Dr. K.P Bhatnager, C. Ramesh, T.V. Ratham for P. Parmeswaran for the Appellant.
29,283 for the assessment year 197273 did number represent entertainment expenditure within the meaning of section 37 ii of the Income tax Act ?
191 of 1976.
The assessment years companycerned here in are 1971 72 and 1972 The first two questions go together.
The provision applicable for the A.Y. 1971 72 was Section 40 a v whereas for the A Y. 1972 73, the provision applicable is Section 40 a 5 which is a successor provision to Section 40 a v .
A.B. Mathur 7,800 36,171 1972 73 Sh.
A.B. Mathur 7,800 40,792 The companymission in the above table means the companymission paid to the said Directors on the sales effected by the assessee, at a prescribed percentage.
S.B. Mathur 18,000 40,792 Sh.
The order dated August 25, 1973 dealt anter alia with the questions arising herein ind held the same against the Revenue.
The Income Tax Officer treated the companymission on sales as perquisites and disallowed the same applying Section 40 a v for the year 1971 72 and Section 40 A 5 for the assessment year 1972 73.
