Mopeds India Ltd. vs Commissioner of Income Tax

B.P. Jeevan Reddy, J.—The following two questions are referred to us u/s 256(1) of the income tax Act, 1961 (''the Act''):

"1. Whether, on the facts and in the circumstances of the case, is the Appellate Tribunal justified in holding that the sums of Rs. 55,897, Rs. 1,47,787 and Rs. 1,82,620 represented capital expenditure for acquisition of plant and machinery?

Whether in view of the fact that the cost of plant and machinery having already been fixed and commissioned to business is the Appellate Tribunal justified in holding that payments of Rs. 55,897. Rs. 1,47,787 and Rs. 1,82,620 form part of the plant and machinery whose acquisition was completed long prior to the previous year for the assessment year 1974-75?"

The assessment years concerned herein are 1974-75, 1975-76 and 1976-77. Identical questions were referred to this Court for the assess ment year 1973-74 in Reference Case No. 13 of 1979. A Bench of this Court consisting of Raghuvir, J. and Ramanujulu Naidu, J., answered the first question in the affirmative, i.e., in favour of the revenue and against the assessee, and on that basis declined to answer the second question as unnecessary. When this reference came up before us, it was contended by the learned standing counsel for the revenue that in view of the decision of the Bench relating to the earlier assessment year, it is not necessary to argue the matter over and again that the same answers should be recorded by us also in this reference.

Shri Ch. Srirama Rao, the learned counsel for the assessee, however, contended very strongly that the facts of the assessment years concerned herein and the facts relevant to the assessment year 1973-74 are different. In particular, he submitted, that statements of facts submitted by the Tribunal in both the references are not identical and that, therefore, the earlier judgment does not govern the present reference. He requested that we should hear and dispose of this reference on the basis of the facts stated in the statement of facts submitted in this reference.

We are not, however, satisfied that there is any difference or distinction in the basic facts in both the references. The basic facts are these:

The assessee is a public limited company with its registered office at Tirupathi. It is engaged in the process of manufacture and sale of mopeds. The machinery required for manufacturing the mopeds was purchased by the assessee from a French manufacturer Motobecane, Pantrin, France. The assessee was granted a foreign exchange loan of Deutsche Marks 900,000 by a German Financier, Kreditanslalt fur Wilderanfban. This entire arrangement was made through the Industrial Credit & Investment Corporation of India Ltd. The arrangement appears to be that the German creditor shall pay the price of the machinery to the French manufacturer. The assessee was to repay the said loan in instalments to be remitted through the ICICI. The assessee had to pay the sum in rupees, i.e., the rupee equivalent of the instalment to the ICICI, which was to remit the instalments in foreign currency. These are the basic facts relevant for the assessment year 1973-74 (which was the subject-matter of Reference Case No. 13 of 1979) as also for the assessment years 1974-75 to 1976-77 which are the subject-matter of the present reference. There is absolutely no change in basic facts. The questions referred for the opinion of this Court in Reference Case No. 13 of 1979 are the following:

"1. Whether, on the facts and in the circumstances of the case, the sum of Rs. 10,588 paid by the assessee as exchange difference cannot be allowed as a revenue loss?"

If the answer to the first question is in the affirmative, whether on the facts and in the circumstances of the case, the said payment can be added to the cost of plant and machinery for the purpose of calculating the admissible depreciation?"

Mr. Ch. Srirama Rao, however, argued that the decision of the Bench in Reference Case No. 13 of 1979 is based upon a particular statement in paragraph 5 of the statement of case in that reference case to the effect: "It was part of the instalments payable to the foreign supplier for supply of plant and machinery. Its nature cannot, therefore, be different from that of the instalments themselves." The learned counsel says that no such statement is found in the statement of facts submitted in the present reference case. We are, however, not satisfied that there is any such difference in facts in both cases. The Tribunal obviously thought it unnecessary to repeat all the facts in the present statement of case inasmuch as all of them were stated in the statement of case submitted in Reference Case No. 13 of 1979. Indeed, the statement of case in Reference Case No. 13 of 1979 is made a part of the statement of case in this case. Paragraph 5 of the statement of the case therein reads as follows:

"The same questions that are now sought to be referred to the High Court have already been referred to the High Court in Reference Case No. 308 (Hyd.) of 1976-77, dated 29-1-1977, for the assessment year 1973-74 and a copy of the statements drawn in this reference application will form part of the present statement as ''other document''."

We are, therefore, unable to see any distinction between the facts in both the references. We did not, therefore, think it necessary to hear the counsel over and again on merits, also because the judgment in Reference Case No. 13 of 1979 has become final. We cannot take a different view in this reference case.

For the above reasons, we answer the first question in the affirmative, i.e., in favour of the revenue and against the assessee. We decline to answer the second question. No costs.

The learned counsel for the assessee makes an oral request for grant of certificate for leave to appeal to the Supreme Court u/s 261 of the Act. We do not, however, think that this is a fit case to be certified under the said provision - more particularly in view of the fact that the judgment of this Court in Reference Case No. 13 of 1979 relating to an earlier assessment year has become final. The request is, therefore, rejected.