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Commissioner of Income-tax Vs. Novelty Trading Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberI.T. Application Nos. 130, 131, 159 to 161, 163 and 169 to 171 of 1981
Judge
Reported in[1984]150ITR453(All); [1983]13TAXMAN312(All)
ActsIncome Tax Act, 1961 - Sections 256(1) and 256(2)
AppellantCommissioner of Income-tax
RespondentNovelty Trading Corporation and ors.
Excerpt:
- .....for the purposes of section 35b of the act, the claim has been accepted by the income-tax appellate tribunal to the extent of 75 per cent. this has been done following the decision of the special bench of the tribunal in the case of j. hemchand & co. v. 2nd, ito, b-ii ward, bombay (i.t.a. no. 3255 of 1976-77) dated june 17, 1978. a counter-affidavit has been filed on behalf of the respondent-assessee in i.t.a. no. 163 of 1981, in which it has been stated that the central board of direct taxes has accepted the correctness of the decision of the special bench of the appellate tribunal in the case of j. hemchand & co. v. 2nd ito (i.t.a. no. 3255 of 1976-77) and further that several commissioners of income-tax have issued instructions that reference applications under section 256(1).....
Judgment:

Rastogi, J.

1. In this group of cases the assessees are engaged in export business. The dispute is in regard to the assessees' claim for weighted deduction in respect of salary and other expenses under Section 35B of the I.T. Act, 1961. So far as salary expenses are concerned for the purposes of Section 35B of the Act, the claim has been accepted by the Income-tax Appellate Tribunal to the extent of 75 per cent. This has been done following the decision of the Special Bench of the Tribunal in the case of J. Hemchand & Co. v. 2nd, ITO, B-II Ward, Bombay (I.T.A. No. 3255 of 1976-77) dated June 17, 1978. A counter-affidavit has been filed on behalf of the respondent-assessee in I.T.A. No. 163 of 1981, in which it has been stated that the Central Board of Direct Taxes has accepted the correctness of the decision of the Special Bench of the Appellate Tribunal in the case of J. Hemchand & Co. v. 2nd ITO (I.T.A. No. 3255 of 1976-77) and further that several Commissioners of Income-tax have issued instructions that reference applications under Section 256(1) or Section 256(2) need not be filed or, if filed, need not be pressed to challenge the correctness of the law laid down by the Special Bench of the Appellate Tribunal in the aforesaid case.

2. The learned counsel for the Department produced before us that circular. We find that the CBPT has by its circular dated December 28, 1981, accepted the decision in so far as the question of allow ability of weighted deduction under Section 35B of the Act is concerned. It has/however, not accepted the apportionment of the claim at 75 per cent. It is none the less conscious of the fact that this issue would be basically a finding of fact and it can be further contested, depending on the stakes of the Revenue involved, by seeking reference to the High Court by raising an appropriate question of law on the ground of perversity.

3. The Revenue in the present applications is seeking reference of the following question:

' Whether, on the facts and in the circumstances of the case, the learned Tribunal was legally justified in confirming the order of the learned Appellate Assistant Commissioner allowing 75% of the salary expenses for the purposes of deduction under Section 35B of the Income-tax Act, 1961? '

4. It would be seen that the Revenue does not dispute the allow ability of the claim of weighted deduction in respect of salary expenses. It disputes only the rate at which it has been allowed by the Appellate Tribunal. This issue is basically a question of fact and stands concluded by a finding of fact. There is no suggestion in the question mentioned above that the finding given by the Appellate Tribunal is not based on any material or that the exercise of discretion in fixing the percentage at which the claim is allowable is arbitrary or perverse. This being so, in our opinion, no statable question of law arises out of the order of the Tribunal. We, therefore, reject these reference applications but make no order as to costs.


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