IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.3 of 1997 Date of decision: 16.09.2008 The Commissioner of Income-tax, Haryana, Rohtak. -----Applicant Vs. M/s Porrits & Spencer (Asia) Ltd., New Delhi. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAKESH KUMAR GARG Present: Mr. Yogesh Putney, Sr. Standing Counsel for the revenue. Mr. A.C. Jain, Advocate for assessee. ----- ORDER: Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Delhi Bench ‘E’, arising out of I.T.A. Nos.3336 and 3506/DEL/1989 in respect of assessment year 1985-86:- “1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Assessing Officer to recalculate the disallowance u/s 37(3-A) to 37(3D) excluding the expenses on road- tax.”? 2. “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the decision of the Ld.CIT(A) deleting the addition of I.T.R. No.3 of 1997 Rs.1,58,707/- made u/s 36(1)(ii) on a/c of commission/bonus paid to employees”? 3. “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the proviso to section 43B inserted by the Finance Act, 1987 w.e.f. 1.4.88 is retrospectively applicable?” As regards question No.1, the finding of the Tribunal is as under:- “12. Next ground is against the disallowance of Rs.25,707/- u/s 37(3A) and 37(3D). At the time of hearing before us it is submitted that the car expenses, considered for disallowance @ 20% as per provisions of Sec. 37(3A) and 37(3D) included a sum of Rs.1,28,582/- on repair, insurance, road tax and of car and wages of driver. Such expenses are allowable u/s 31 of the I.T. Act and not u/s 37. Hence, the same cannot be considered for disallowance u/s 37(3A) and 37(3D). In this respect, he relied upon Nathmal Bankat Lal Parikh & Co. Vs. CIT, 122 ITR 168 (AP). The above view cannot be accepted in view of judgment of the Hon’ble Supreme Court in Britannia Industries Limited v. Commissioner of Income-tax and another (2005) 278 ITR 546, holding that section 31 will not be attracted to cases which are covered by the provisions of disallowance under Section 37(3-A) to 37(3D). Accordingly, the said question is answered against the assessee and in favour of the revenue. Question No.2 is covered by our order passed today in I.T.R. Nos.80 to 82 of 1982 (M /s Porrits & Spencer (Asia) Ltd., New 2 I.T.R. No.3 of 1997 Delhi v. The Commissioner of Income-tax, Haryana). This question is accordingly, decided in same terms. As regards question No.3, the matter is covered against the revenue in view of judgment of the Hon’ble Supreme Court in Allied Motors P. Ltd. v. CIT (1997) 224 ITR 677, holding that Section 43-B is retrospective. Accordingly, the said question is answered in favour of assessee and against the revenue. The reference is disposed of accordingly. ( ADARSH KUMAR GOEL ) JUDGE September 16, 2008 ( RAKESH KUMAR GARG ) ashwani JUDGE 3