Brooke Bond India Ltd. vs Commissioner of Income Tax

Banerjee, J.—The following questions of law have been referred to this Court by the Tribunal u/s 256(1) of the income tax Act, 1961 :

"7. Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the assessee''s claim for weighted deduction in respect of the following items:

Rs.

(i)

Packing credit interest u/s 35B(1)(b)(viii) of the income tax Act, 1961

24,48,257

(ii)

Post-due/Overdue interest on export u/s 35(1)(b)(viii)

2,83,483

(iii)

Bank charges including cost of remittance

4,12,427

(iv)

Exchange losses on export u/s 35B(1)(b) (vi)

2,00,000

(v)

Freight & insurance u/s 35B(1)(v) and (viii)

1,48,16,312

(vi)

Packing & handling u/s 35B (v) and (vii)

1,84,58,697

Whether, on the facts and in the circumstances of the case, the Tribunal was right in not admitting the additional ground concerning a claim for allowance of weighted deduction u/s 35B of the income tax Act of Rs. 2,18,54,489 as salary (instead of Rs. 1,44,296 in the ground already taken).

Whether, the Tribunal was right in rejecting the aforesaid additional ground even on merits.

Whether, the Tribunal was right in rejecting the assessee''s claim for deducting of the surtax liability in computing its total income?"

The assessment year involved is the assessment year 1977-78 for which the relevant period of account is the year ending on 3-7-1876.

The first question is now concluded by the decision of this Court in the assessee''s own case in respect of earlier year in the case in respect of earlier year in the case of Brooke Bond India Ltd. v. C1T [IT Reference No. 13of 1983dated 3-8-1989]. Following the aforesaid decision the question has to be answered in the affirmative and in favour of the revenue.

Question No. 4 is also concluded by the decision of this Court in the case of Molins of India Ltd. Vs. Commissioner of Income Tax, . Following the aforesaid decision, the question No. 4 has to be also answered in the affirmative and in favour of the revenue.

With regard to question Nos. 2 and 3, the Tribunal has held as follows :

''Therefore, before allowing any part of the claim over and above the salary of the export department, the entire expenditure incurred by the assessee would have to be thoroughly scrutinized and those expenses which could be considered to be eligible for weighted deduction would have to be sorted out. Such course would involve a fresh investigation and enquiry over the entire facts and circumstances of the case. This is prohibited by the decision of the Supreme Court in The Additional Commissioner of Income Tax, Gujarat Vs. Gurjargravures Private Ltd., and is not contemplated to be permissible even by the Andhra Pradesh High Court in Commissioner of Income Tax Vs. Gangappa Cables Ltd., which merely sought to draw a distinction from the decision in Gurjargravures'' case (supra). The claim having never been made before the authorities below and not being prima facie allowable unless a fresh and through investigation is made into the facts of the case, the same, therefore, cannot be entertained at this stage. We, therefore, refuse to allow the assessee to raise this additional ground."

The question is whether the Tribunal will allow taking additional grounds or not is a discretionary matter. The Tribunal has given reasons for not exercising the discretion and from the reasons it appear that the Tribunal has judicially exercised its discretion. We find no reason to interfere with the discretion exercised by die Tribunal, as we do not find and infirmity in the reasons and the order of the Tribunal with regard to question Nos. 2 and 3. Accordingly these two questions must be also be answered in the affirmative and in the favour of the revenue.

In the circumstances, all the four questions are answered in the affirmative and in favour of the revenue. There will be no order as to costs.

Sen, J.

I agree.