Commissioner of Income Tax vs Oswal Woollen Mills Ltd. (No. 3)

The following questions of law have been referred for the opinion of this court by the Income Tax Appellate Tribunal, Chandigarh, arising out of its order dated November 10,1987, in respect of the assessment year 1981-82:

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the assessee''s claim for Rs. 2,36,935 on account of ''leave with wages'' in spite of the fact that it was simply a provision and a contingent liability?

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the assessee''s claim for depreciation and investment allowance on grain analysers despite the fact that there was no proof of its use in the industrial undertaking?

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding the refinery units at Ludhiana and Madras as ''industrial undertaking7 for the purposes of investment allowance and deduction u/s 80J with respect thereto?

Whether, on the facts and in the circumstances of the case, and on a proper interpretation of the relevant provisions of law/rules, the Appellate Tribunal was right in law in allowing investment allowance on electrical installations such as exhaust fans and humidifiers?

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing tour expenses of Rs. 77,713 as revenue expenditure despite the fact that they were incurred for the import of machinery (capital asset)?

Following our earlier judgment in Commissioner of Income Tax Vs. Oswal Woollen Mills Ltd., passed on April 19, 2006, we decide questions Nos. 1 to 4 in favour of the assessee and against the Revenue.

We find that question No.l, herein, was question No. 6 in the said judgment. It was held (page 265):

As regards question No. 6 is concerned, it is covered by a judgment of the hon''ble Supreme Court of India in Bharat Earth Movers Vs. Commissioner of Income Tax, Karnataka, , which was followed even in the assessee''s own case in Commissioner of Income Tax Vs. Oswal Woollen Mills Ltd., No contrary view has been shown on behalf of the Revenue. Accordingly, following the said judgment, we answer this question in favour of the assessee and against the Revenue.

Question Nos. 2 and 4, herein, were identical to question No. 5 in the said judgment. It was held (page 265):

As regards question No. 5 is concerned, it is covered by a Judgment of the Gujarat High Court in Commissioner of Income Tax Vs. Starlight Silk Mills (P) Ltd., taking a view that AC plants, electric installation and transformers form integral part of plant and machinery, hence investment allowance is available on the same. No contrary view has been shown by learned Counsel for the Revenue. Keeping in view the findings of facts recorded by the Commissioner of Income Tax (Appeals) and affirmed by the Tribunal to the effect that humidifiers in wool chambers are part of plant and following the judgment referred to above, we answer the question in favour of the assessee and against the Revenue.

Question No. 3, herein, is similar to question No. 4 in the said judgment. It was held (page 265):

As far as question No. 4 is concerned, counsel for the parties are agreed that the question referred to above has already been answered in favour of the assessee and against the Revenue by a judgment of this Court in CIT v. Oswal Woollen Mills Ltd. (No. 1) [2002] 257 ITR 737 following the same, we answer this question against the Revenue and in favour of the assessee.

As regards question No. 5, the finding recorded by the Tribunal is that the tour was for the purpose of exploring foreign markets and purchase of machinery required for modernization of the existing unit.

In view of this finding, we are of the view that the Tribunal was right in allowing tour expenses of Rs. 77,713 as revenue expenditure even if no machinery was purchased.

The reference is disposed of accordingly.