Parshuram Pottery Works Co. Ltd. vs Commissioner of Income Tax

Rajesh Balia, J.—At the instance of assessee - M/s Parshuram Pottery Works Co. Ltd., Morvi, the following question of law has been referred to this Court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was not entitled to weighted deduction under s. 35B of the Act on the following items of expenditure :

Rs. 1. Inspection fees 5,353 2. Insurance 29,674 3. Bank commission 1,571 4. Octroi 10,401 5. Port expenses 9,919 6. Rly. and Lorry freight 95,078 7. Miscellaneous 2,382 8. Steamer freight 14,268 9. Packing expenses 3,65,729"

Heard the learned counsel for the parties.

The ITO had allowed weighted deduction on foreign export tour, and commission to foreign selling agency out of a total of 15 items claimed by the assessee and allowed 50% thereof. The CIT(A) restricted the disallowance of weighted deductions to expenses referred in the question.

Learned counsel for the assessee has candidly stated that this Court in assessee''s own case, related to asst. yrs. 1976-77 has held against the assessee in IT Ref. No. 89 of 1983 reported in Parshuram Pottery Works Co. Ltd. Vs. Commissioner of Income Tax, . Following the aforesaid decision we answer the question referred to above in affirmative that is to say in favour of the Revenue and against the assessee.

At the instance of the Revenue, the following questions of law have been referred for our decision for the asst. yr. 1977-78 arising out of ITA Nos. 2300 and 2254/Ahd/81 dt. 27th Dec., 1982 :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the expenditure incurred by the assessee for maintaining guest houses at Morvi, Bombay, Thangadh were allowable under s. 37(4) of the Act ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the expenditure on guest houses at Thangadh, Bombay and Wankaner was allowable under s. 37(4) of the Act notwithstanding the fact that no registers were maintained in relation thereto by the assessee ?"

From the order of the Tribunal we find that the Tribunal has merely followed its decision rendered in the case of assessee for the asst. yr. 1976-77 without assigning any reasons in the order for asst. yr. 1977-78 in as much as from the order of the Tribunal relating to asst. yr. 1976-77, the Revenue had sought a reference and question of law was referred to this Court which was the subject matter of this reference. The said reference application has been decided on 27th Sept., 1995 [since reported as CIT vs. Parshuram Pottery Works Co. Ltd.] which governs this case also so far as the question referred to above is concerned. Accordingly, for the reasons stated in the said order, we decline to answer the question. It will be open for the Tribunal to dispose of the appeal under s. 260 of the IT Act, 1961 in the light of observations made by this Court after determining the questions which ought to have been decided. No order as to costs.