Judgment :- K. GNANAPRAKASAM, J. South India Corporation Pvt. Ltd., Madras, is the assessee in this case. In respect of the computation of the income for the assessment year 1978-79, the assessee claimed expenditure under several heads such as guarantee commission paid to the directors, expenses incurred in providing motor cars to the directors or other persons for their personal use, expenses incurred for the maintenance of Adyar House occupied by the Deputy Chairman of the assessee-company and also property tax, urban land tax, insurance premium, electricity charges, gardener salary, depreciation, pest control expenses and medical expense reimbursement as perquisite for the purposes of computing the disallowance under section 40(c) of the Income-tax Act, 1961. The Income-tax Officer did not take these expenditure into account for the purposes of computing the amount disallowable under section 40(c). But, however, the Commissioner of Income-tax (the "CIT") by virtue of his powers under section 263 of the Act, revised the order of the Income-tax Officer allowing certain expenses to be deducted for computing the income. Not satisfied with the order passed, the assessee took the matter on appeal to the Tribunal and the Tribunal after analysing the order of the Commissioner of Income-tax, referred two questions to this court, viz, "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the guarantee commission paid to the directors should not be considered for the computation of the amount disallowable under section 40(c) of the Income-tax Act ? (2) Whether the Tribunal was correct in holding that for the purpose of computing the amount disallowable under section 40(c) in respect of the motor cars provided to the directors or other persons for their personal use, the value of the perquisites should be taken applying rule 3 of the Income-tax Rules and not the actual expenditure incurred by the assessee in respect of the asset used by the directors or other persons ?" At the instance of the assessee, the following questions were also referred to this court, "(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the Commissioner of Income-tax has jurisdiction to revise the order passed by the Income-tax Officer under section 143(3) read with section 144B of the Income-tax Act ? (2) Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the expenses incurred by the company on Adyar House occupied by the Deputy Chairman towards insurance premia, electricity charges, gardener's salary, depreciation and pest control expenses should be included in arriving at the amount of disallowance under section 40(c) ? (3) Whether the Tribunal is right in holding that the medical expenses reimbursed should be included in arriving at the amount of disallowance under section 40(c) ?" As far as the first question referred at the instance of the Revenue, a similar case arose for the consideration of the apex court in the case of Prakash Beedies P. Ltd. v. CIT where it has been held as follows: "The payments were made to the partners in consideration of their valuable right parted with by the firm in favour of the company. Even assuming that the payments were to the partners, so long as the agreement whereunder the payments were made was not held to be a mere device or a mere screen, the payments could not be treated as payments made to directors as directors and the payments would not fall within section 40(c) of the Income-tax Act." Following the principles laid down in the above case, we answer the first question in favour of the assessee and against the Revenue. With regard to question No. 2 referred at the instance of the Revenue, a similar question has been answered by this court in the case of CIT v. Madura Coats Ltd. where it has been held as follows, "Sections 40(c) and 40A(5) of the Income-tax Act, 1961, were enacted with a view to discourage the assessees from incurring expenditure which results directly or indirectly in the provision of any benefit, amenity or perquisite to their employees beyond a particular limit and any expenditure incurred beyond the prescribed limit is liable to be disallowed. Sections 40(c) and 40A(5) constitute a composite scheme. The objects and purposes of section 40A(5) of the Act and rule 3 of the Income-tax Rules, 1962, are distinct and different and the taxability of the amount in the hands of the employee would not be a criterion for deductibility of the said amount in the hands of the employer, either under section 40(c) or under section 40A(5). The objects and purposes of section 40A(5) of the Act and rule 3 of the Income-tax Rules, 1962, are distinct and different and the taxability of the amount in the hands of the employee would not be a criterion for deductibility of the said amount in the hands of the employer, either under section 40(c) or under section 40A(5). In the context of section 40(c) or 40A(5) of the Act, the expenditure that is contemplated is only the actual expenditure and not the notional value of perquisite assessed in the hands of the director or employee. It may be true that a car placed at the disposal of the director was mostly used for the company's purpose and was used for the personal purpose of the directors rarely and even in such case, the actual expenditure incurred by the company will have to be subject to the ceiling under section 40(c) of the Act. In considering the deductibility of the expenditure, the section is not concerned with the extent of the use of the asset by the director or employee for his personal use. But, the section focuses its attention on the expenditure claimed by the assessee on its asset used by the director. In other words, the quantum of allowance or disallowance is not related to the extent of user by the director or employee for his personal use, but once the factum of user of the asset of the company by the director or employee for his personal purposes is found, the quantum to be disallowed will be the actual expenditure claimed by the company. The valuation of perquisite under rule 3 has no relevance in determining the ceiling under section 40(c) or 40A(5). There is no material difference between the use of a car and the use of a house and in the light of the ambit of sections 40(c) and 40A(5) of the Act, the principle laid down by the court in Wheels India Ltd. v. CIT that only the actual expenditure has to be taken into account is applicable." The said principles are applicable to the case on hand and, therefore, the question is answered in favour of the Revenue and against the assessee. In respect of the questions referred at the instance of the assessee, the first question is with regard to the powers of the Commissioner of Income-tax under section 263 to revise the order passed by the Income-tax Officer. An elaborate argument was advanced before the Tribunal and before us also. This question has been answered by our court in CIT v. Eimco-KCP Ltd., wherein it was held (page 611), "In a discussion about the scope of the appellate jurisdiction of the Appellate Assistant Commissioner under the taxing Acts, a theory is often trotted out that the entire assessment order gets removed to the appeal forum even if the assessee's grounds of appeal touch but a particular aspect of the Income-tax Officer's order. This theory is only a shorthand way of reminding us that the assessee is not the dominus litus in an appeal before the Appellate Assistant Commissioner, that even if he wishes to withdraw the appeal, the Appellate Assistant Commissioner can get on with it, and that the Appellate Assistant Commissioner can go beyond the subject-matter of the appeal and enhance the assessment. The theory that the record of assessment as a whole gets removed before the Appellate Assistant Commissioner is but an enigma and must not be literally understood. We have, on an examination of the provisions of the Act, been able to arrive at the position that the Commissioner of Income-tax is not rendered powerless to exercise his revisional jurisdiction under section 263 to remove the prejudice to the Revenue in an order of the officer merely because of the pendency of an appeal against another part of the same order which is to the prejudice of the assessee. The theory that the whole order of assessment is before the Appellate Assistant Commissioner must be read subject to the provisions of the Act. We, therefore, hold that the order passed by the Commissioner in this case was within his jurisdiction under section 263 of the Act." This court after taking into consideration the various pronouncements in this regard has stated that the Commissioner of Income-tax has got jurisdiction under section 263 of the Act to interfere with the order passed by the Income-tax Officer. Hence, we also hold that the Commissioner of Income-tax has got revisional power and the question is answered in favour of the Revenue and against the assessee. Hence, we also hold that the Commissioner of Income-tax has got revisional power and the question is answered in favour of the Revenue and against the assessee. The next question is with regard to the expenditure incurred by the company on Adyar House occupied by the Deputy Chairman. As far as the expenditure are concerned, it has been held by this court in the assessee's case reported in South India Corporation Agencies (P.) Ltd. v. CIT. "That the provisions of section 40A(5)(a) of the Act would cover any expenditure in respect of any asset of the assessee used by the employee either wholly or partly for his own purpose or benefit. The expression, 'expenditure' in section 40A(5) is wide enough to cover expenses on repairs. It cannot be confined only to extraordinary expenditure incurred by the assessee by way of renovation, but it would include and encompass within itself the normal repair expenditure and also the expenditure incurred at the behest of the employee to keep the house in a comfortable living and habitable condition. Electricity charges and depreciation would also be covered by section 40A(5). Hence, depreciation, electricity charges and expenses on repairs would be subject to the ceiling under section 40A(5)." As such this question is answered accordingly in favour of the Revenue and against the assessee. With regard to the expenses incurred towards medical expenses reimbursement claim, it has been held by the apex court in the case of CIT v. Mafatlal Gangabhai & Co. P. Ltd. after considering the provisions of sections 40 and 40A as follows (page 649) "Section 40(a)(v) was introduced with a view to check the deductible expenditure incurred by assessees (including companies) in providing amenities, benefits and perquisites to their higher paid employees. This sub-clause is indeed an improvement upon section 40(c)(iii) which preceded it. Under sub-clause (v), the deduction in respect of expenditure which results directly or indirectly in the provision of benefits, etc., to an employee is limited to an amount equal to one-fifth of the salary paid to such employee during the relevant year or to an amount calculated at the rate of rupees one thousand per month, whichever is less. Under sub-clause (v), the deduction in respect of expenditure which results directly or indirectly in the provision of benefits, etc., to an employee is limited to an amount equal to one-fifth of the salary paid to such employee during the relevant year or to an amount calculated at the rate of rupees one thousand per month, whichever is less. Further, any expenditure incurred upon and any allowance admissible to the assessee/employer in respect of any assets provided by him to the employee free of charge or at a concessional rate is also brought within the purview of the limits prescribed by the sub-clause. Payment of any sum in respect of any obligation, which, but for such payment, would have been payable by the employee is also brought within the ambit of the sub-clause. Section 40A(5) is yet a further improvement to section 40(a)(v)." It is further observed that (page 651)" according to section 40, which opens with a non obstante clause, 'notwithstanding anything to the contrary in sections 30 to 38', the amounts mentioned in several clauses therein shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession'. Clause (a) contains several sub-clauses. We are concerned with sub-clause (v) alone. The main limb of sub-clause (v) places a limit upon two kinds of expenditure, viz., (a) any expenditure which results directly or indirectly in the provision of any benefit or amenity or perquisite whether convertible into money or not, to an employee (including any sum paid by the assessee in respect of any obligation which but for such payment would have been payable by such employee) or (b) any expenditure or allowance in respect of any assets of the assessee used by such employee either wholly or partly for his own purposes or benefit. The limit prescribed - or ceiling provided, as it may be called - is one-fifth of the amount of salary payable to the employee or an amount calculated at the rate of one thousand rupees for each month or part thereof comprised in the period of his employment during the previous year or whichever is less. Any expenditure over and above the said limit/ceiling has to be disallowed ... Any expenditure over and above the said limit/ceiling has to be disallowed ... The opening words are 'any expenditure which results directly or indirectly in the provision or any benefit or amenity or perquisite, whether convertible into money or not, to an employee'. It is clear from the above words that it is not any and every expenditure that is attracted by the sub-clause but only such expenditure which results directly or indirectly in the provision of any benefit, amenity or perquisite to an employee. Once this is so, it is immaterial whether such benefit, amenity or perquisite is convertible into money or not. The words 'directly or indirectly' are equally significant. While the expressions 'benefit' and 'amenity' are not defined by the Act, the expression 'perquisite' is defined in sub-section (2) of section 17. While it is not necessary to set out the entire definition of 'perquisite' in the said sub-section, it is sufficient to mention that it includes among others 'the value of rent-free accommodation provided to the assessee by his employer'." The facts, in our case, are similar to the facts considered in the above case and the principles are applicable to payments made towards medical reimbursement also as the same is covered under section 40A(5). After having examined the definition of perquisite which includes both benefits and amenities we are of the view that the Tribunal is right. The ratio of the judgment is applicable to the case on hand and we accordingly answer the question in favour of the Revenue and against the assessee.