Commissioner Of Income-Tax vs Orient Express Company Private ...
1987 Latest Caselaw 15 Del

JUDGMENT

1. One question is common in all these petitions and that is whether respondent No. 3 was rightly held entitled to investment allowance under section 32A of the Income-tax Act. The assessed is carrying on the business of a hotel and the question is whether this falls under the terms of section 32A. In view of the divergence of opinion in various judicial decisions referred to in the order of the Tribunal, we therefore, direct the Tribunal to make a statement of the case and refer, for all the three years, the following question for the decision of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessed carrying on a hotel business was entitled to investment allowance under section 32A?"

2. In the context of the above question, we may point out that the assessed has also raised another common question on which reference is sought in the following terms :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the issue regarding the hotel business being covered under section 32A does not arise out of the first appellate authority ?"

3. In this connection, it may be mentioned that while the Tribunal in the order for 1980-81 (ITC No. 161/1986) discussed the question as to whether a hotel business is entitled to investment allowance in the other two years, it apparently refused to deal with this question raised before it by the Revenue as the question did not arise out of order of the first appellate authority. The question raised above is, therefore, relevant for the assessment year 1978-79 and 1979-80 (ITCs Nos. 44 and 45/1986). We are of the question that the Tribunal should be directed to refer this question for those two years also because though the Tribunal did not in terms discuses those two years also because though the Tribunal did not in terms discuss the applicability of section 32A to a hotel business, it has dealt with the Revenue's contention regarding the disallowance of the investment allowance which was sought to be sustained by the Department for a different reason. The question whether in the appeal against the order of the Commissioner of Income-tax (Appeals) allowing the claim for investment allowance, the Department could also urge this aspect before the Tribunal needs consideration. We, therefore, direct the reference of this question for the assessment years 1979-80 and 1978-79.

4. The second question which is raised only in ITCs Nos. 44 and 45 of 1986 is whether the assessed is disentitled to the investment allowance scheme because no requisite reserve has been created by the assessed-company before the close of books of the relevant previous year. On this, the finding is that the requisite "reserve" has been created by holding a second annual general meeting of the members of the company and that the accounts had been duly amended so as to provide for the reserve before the assessment was completed. In view of the fact that the section prescribes no point of time by which the reserve should be created and in view of the various decisions also referred to by the Tribunal, we think, no question of law arises in regard to this aspect. We, therefore, decline to refer this question.

5. In ITC No. 161 of 1986, another question of which reference is sought is also, in our opinion, a question of law. We direct the Tribunal to state a case and refer the following question for the decision of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance of Rs. 3,782 made under section 40A(5) ?"

6. In the result, these applications are partly allowed. The Tribunal directed to submit a consolidated statement of case for all the three years and refer he questions set out in paragraph 1, 2 and 4 above for the decision of this court.

7. These applications are disposed of. There will be no order as to costs.