Commissioner of Income Tax vs Continental Devices India Ltd.

In this petition for the assessment year 1982-83, the petitioner seeks reference of the following five question to this court :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in upholding the finding of the Commissioner of Income Tax (Appeals) deleting the addition of Rs. 7,72,465 in respect of the under valuation of the closing stock by following their earlier order of the assessment year 1980-81 by ignoring the material facts that the order relied upon by the Income Tax Appellate Tribunal has not been accepted by the Department and the under valuation of the stock was due to the change in the method of valuation of the closing stock which was not bona fide ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in directing that investment allowance and depreciation may be allowed on a sum of Rs. 3,11,270 which was actually technical services and cannot be considered as plant ?

Whether, on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was correct in law in directing that investment allowance may be allowed on the computer by ignoring the material facts that investment allowance is not admissible on items mentioned in Schedule XI of the Income Tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in directing that the deduction u/s 35B may be allowed on the foreign travel expenses of Rs. 3,49,752 by following their earlier order for the assessment year 1981-82, which has not been accepted by the Department ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in directing that investment allowance may be allowed on the air-conditioning plant by ignoring the principles laid down by the Madhya Pradesh High Court in the case of Mittal Ice and Cold Storage Vs. Commissioner of Income Tax, ?"

As regards questions Nos. 1, 3 and 5, in our opinion, the said questions are questions of fact. With regard to question No. 1, we are further informed that, in respect of the subsequent year, the closing stock has been accepted by the Department to be the opening stock. As far as question No. 5 is concerned, for the subsequent assessment year, a similar contention had been raised and the assessing authority had accepted that investment allowance is allowable on the air-conditioning plant. This is for the reason that the air-conditioning is used in the factory. As far as question No. 3 is concerned, the finding of fact is that the computer was used to help the assessed in the manufacture of its products and was not a part of its office equipment.

In our opinion, question No. 2 is a question of law.

As regards question No. 4, we find that the Income Tax Officer had examined each claim for the expense incurred on foreign tours and has given his finding that the total expense of Rs. 3,49,742 was not liable to weighted deduction u/s 35B of the Act. Prima facie it appears that each individual expense was not examined either by the Commissioner of Income Tax (Appeals) or by the Tribunal.

We, Therefore, direct the Tribunal to state the case and refer the following two questions to this court :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in directing that investment allowance and depreciation may be allowed on a sum of Rs. 3,11,270 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in directing the deduction u/s 35B of the expenses of Rs. 3,47,372 ?"

The petition stands disposed of. There will be no order as to costs.