Commissioner of Income Tax vs Hindustan Sugar Mills Ltd.

Mrs. Sujata V. Manohar, C.J.—This reference under s. 256(1) of the IT Act, 1961 which is before us raises questions both at the instance of the assessee as well as at the instance of the Revenue :

At the instance of the Revenue:

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that, for the purpose of computing the relief under s. 80J of the IT Act, 1961, the gross value of the assets without deducting the liabilities to third parties should be taken as the capital employed in the industrial undertaking ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that sum of Rs. 3,34,369 was not assessable as accrued income during the previous year relevant to the asst. yr. 1973-74 ?

At the instance of the assessee:

Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the surtax liability of Rs. 4,63,075 was not an allowable business expenditure under s. 37(1) of the IT Act, 1961 ?

Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in not admitting the additional grounds of appeal raised before it in connection with the computation of capital employed for the purpose of deduction under s. 80J of the Act ?"

The questions have been numbered by us consecutively for the sake of convenience.

2.1 In view of the decision of the Supreme Court in the case of Lohia Machines Ltd. and Another Vs. Union of India (UOI) and Others, , question No. 1 is answered in the negative and in favour of the Revenue.

It is an accepted position that in view of the decision of this Court in the case of Commissioner of Income Tax Vs. Seksaria Biswan Sugar Factory Pvt. Ltd., , question No. 2 must be answered in the affirmative and in favour of the assessee. It is answered accordingly.

It is an accepted position that in view of the decision of this Court in the case of Lubrizol India Ltd. vs. CIT (1991) 187 ITR 25 (Bom), question No. 3 must be answered in the affirmative and in favour of the Revenue. It is answered accordingly.

The learned counsel for the assessee has submitted that this question is now academic and need not be answered. We accordingly decline to answer question No. 4 which is referred at the instance of the assessee.

The reference is disposed of accordingly.

No order as to costs.