COMMISSIONER OF INCOME TAX vs BHARAT GENERAL and TEXTILE INDUSTRIES LTD.

BHAGABATI PRASAD BANERJEE, J. :

The Tribunal has referred the following questions of law under s. 256(1) of the IT Act, 1961 to this Court :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions for gratuity relating to earlier year written back to the profit and account was not assessable as profit under s. 41(1) of the Act ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order of the AAC directing the ITO to recompute the capital of the new industrial undertaking, viz., Malkapur Oil Mills in accordance with the decision of the Calcutta High Court in the case of Century Enka Ltd. Vs. Income Tax Officer and Others, as applied by the Income Tax Appellate Tribunal, Bombay Bench in the case of Amar Dye Chem. Ltd. ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that on the ratio of the Supreme Court judgment in Metal Box Company of India Ltd. Vs. Their Workmen, the assessee can claim as deduction for the provision for payment of leave salary accrued to the employees in the earlier year and therefore, directing the ITO to verify the claim of the assessees in the matter of privilege leave in the light of the Leave Rules ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the loss arising out of exchange fluctuation arising out of the payment of instalments of loan obtained for the purchase of machineries on deferred payment basis, was not a capital but a revenue expenditure ?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to the deduction under s. 80G of the IT Act, 1961 on donation paid to Viswamangal Charity Trust ?"

In this proceeding the assessment year involved is 1974-75 for which the relevant year of account is the year ended on 31st March, 1974.

So far as the first question is concerned, at the time of hearing a letter dt. 31st March 1974 was handed over to Court showing that the assessee had filed a return under the Amnesty Scheme announced by the CBDT.

In view of that the assessee has stated that the assessee has conceded to the question of law referred in this connection relating to taxability of the gratuity provisions the same should be decided in favour of the Revenue.

Accordingly question No. 1 is answered in the affirmative (sic) and in favour of the Revenue.

Let the said letter dt. 31st March, 1987 with annexures handed over to Court be kept on record treating the same as a part of the record.

So far as the question No. 2 is concerned the same in now concluded by a decision in the case of Lohia Machines Ltd. and Another Vs. Union of India (UOI) and Others, . In view of the said decision the question referred is answered in the negative and in favour of the Revenue. The Tribunal will now examine and decide the case in view of the principles laid down in the case of Lohia Machines Ltd. (supra).

So far as question No. 3 is concerned this point is now concluded by the decision in the assessees own case in the earlier years reported in Commissioner of Income Tax Vs. Bharat General and Textile Industries Ltd., and in view of the said decision the question referred in answered in the negative and in favour of the Revenue.

So far as question No. 4 is concerned this point is now concluded by the decision in the assessees own case in the earlier years reported in Commissioner of Income Tax Vs. Bharat General and Textile Industries Ltd., and in view of the said decision the question referred is answered in the negative and in favour of the Revenue.

So far as question No. 5 is concerned this question is now concluded by a decision of this Court in the case if Commissioner of Income Tax Vs. Upper Ganges Sugar Mills Ltd., and in view of the said decision this question of law is answered in the negative and in favour of the Revenue.

There will be no order as to costs.

SUHAS CHANDRA SEN, J. :

I agree.