(a) Income-tax---

----Reference---Income from undisclosed sources---Interest---Addition of notional interest on loan whether justified---Question of law---Indian Income Tax Act, 1961, S.256.

Question whether the Tribunal was justified in deleting the addition of the notional interest on the loan given by the assessee was a question of law.

(b) Income-tax---

----Reference---Capital or revenue expenditure---Expenditure on repair of worn-out machinery---Whether revenue expenditure---Question .of law-- Indian Income Tax Act, 1961, Ss.37 & 256.

Question whether .the expenditure on repair of worn-out plant and ma4inery was revenue expenditure was a question of law.

(c) Income-tax---

----Reference---Business expenditure---Disallowance of expenditure-- Expenditure on purchasing articles for presents---Presents not for purposes of advertisement---Rule 6-B does not apply---Tribunal justified in allowing deduction of expenditure---No question of law arises---Indian Income Tax Act, 1961, Ss.37 & 256---Indian Income Tax Rules, 1962, R. 6-B.

Rule 6-B of the Indian Income Tax Rules, 1962, applies only in cases of presentation of articles by way of advertisement. It was not claimed by the assessee that items, which were presented were by way of advertisement. This being so, the Tribunal was justified in allowing deduction of the cost of the articles purchased for purpose of presentation. No question of law arose from its order.

(d) Income-tax---

----Reference---Capital or, revenue expenditure---Expenditure on maintenance of garden---Tribunal justified in allowing part of expenditure---No question of law arose---Indian Income Tax Act, 1961, Ss.37 & 256.

On the facts and in the circumstances of the case, the Tribunal was justified in allowing part of the expenses in connection with the maintenance of the garden as revenue expenditure. No question of the law arose from its order.

(e) Income-tax---

----Reference---Business expenditure---Disallowance---Computation of admissible expenditure under S.40(c)---Tribunal justified in holding that pro rata electricity and water charges incurred for official use of premises occupied by Directors was, deductible---No question of law arose. Indian Income Tax Act, 1961, Ss.37 & 256.

Tribunal was right in directing that, while computing admissible deduction under section 40(c) of the Income Tax Act, 1961, the pro rata electricity and water charges incurred for alleged official use of the premises occupied by the directors should be allowed. No question of law arose from its order.

S.K. Aggarwal for the Commissioner.

B. Gupta and R.K. Chaufla for the Assessee.

JUDGMENT

The petitioner seeks reference of the following questions:

"(1) Whether, on the facts and in the circumstances of the case the Tribunal was justified in allowing part of the expenses in connection with the maintenance of Sikri Garden as revenue expenditure?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs.30,000 being notional interest on loan given to Modi Rubber Ltd.?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that while computing admissible deduction under section 40(c) of the Income Tax Act, 1961, the pro rata electricity and water charges incurred for alleged official use of the premises occupied by the directors should be allowed?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing a sum of Rs.9,36,939 as repairs of old and worn-out plant and machinery as revenue expenditure?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing a sum of Rs.7,012, being cost of presentation articles to the constituents, by ignoring the provisions of rule 6-B of the Income Tax Rules, 1962?"

In our opinion, questions Nos. l, 3 and 5 are questions of fact. As far as questions Nos.1 and 3 are concerned, similar questions were sought to be raised in I.T.C. No.2 of 1988, but the said I.T.C. was dismissed by this Court. As far as question No.5 is concerned, the finding of the Income-tax Officer was that this expense of Rs.7,012 is with regard to the giving of items like sarees, etc., to persons who visit the factory under the direction of the management. Rule 6-B applies only in the case of presentation of articles by way of advertisement. It was not claimed by the assessee that items, which were presented were by way of advertisement. This being so, rule 6-B does not apply and the Tribunal's finding was, therefore, correct. Question No.5 also need not be referred.

For the aforesaid reasons, we direct the Tribunal to refer questions Nos.2 and 4 to this Court as the same are questions of law.

No orders as to costs.

M.B.A./42/T.F Order accordingly.