Commissioner of Income Tax vs Dalmia Cement Ltd. (No. 1)

After hearing both counsel, we are of the opinion that the first of the questions sought to be referred is a question of law in view of the Explanation introduced in section 37(2A) with retrospective effect from1976. In our opinion, the other questions are all questions of fact.

So far as question No. 2 is concerned, both the Commissioner of Income Tax (Appeals) and the Tribunal have found that a part of the expenses incurred on V. H. Dalmia relating to M/s. Delton Properties Ltd. was met out of the monies provided by the foreign company and that there was no reason to disallow a part of the expenditure met by the Indian company on the foreign tour as admittedly the director had attended to the affairs of the Indian company during the tour. On question No. 3, the extra shift allowance has been allowed only in respect of plant and machinery installed in the factory on estimated basis. So far as question No. 4 is concerned the Commissioner of Income Tax (Appeals) has given detailed and cogent reasons and pointed out that the term "refractory" is used in the Tax Export Credit Certificate Scheme as well as the Industries (Development and Regulation) Act. He has followed those definitions and nothing to the contrary has been placed before us. In the above circumstances, we reject the application in so far as questions Nos. 2 to 4 are concerned. But so far as question No. 1 is concerned, we direct the Tribunal to state a case and refer the following question of law for the decision of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in restricting the disallowance under the head ''Sales promotion expenses'' from Rs. 1,04,857 to 20,970 particularly in view of the Explanation introduced in section 37(2A) by the Finance Act, 1983 ?"

The application is disposed of. No costs.