Delhi High Court
Commissioner Of Income-Tax vs Bharat Commerce And Industries ... on 7 August, 1989
Equivalent citations: 1990 184 ITR 143 Delhi
Author: Kirpal
Bench: B Kirpal, C Chaudhary
JUDGMENT
Kirpal, J.
1. The petitioner has filed this petition under section 256(2) for directing the Tribunal to state the case and refer the following questions of law to this court :
"1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that an expenditure of Rs. 4,38,329 on setting up a project in Indonesia was not of capital nature by following their earlier order which has not been accepted by the Department ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the donation of Rs. 1,22,237 being donation to Bharat Commerce Vidyalaya was an allowable deduction ?
3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the expenditure of Rs. 6,20,213 on the machinery which could not be expected was not of capital nature ?
4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the sum of Rs. 4,30,238 representing the cost of the gifts made to the agents, customers and dealers was an allowable deduction by ignoring the material fact that this expenditure was not made wholly and exclusively for the purpose of the business of the assessed-company and was also hit by the provisions of rule 6D of the Income-tax Rules ?
5. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the sum of Rs. 86,386 representing expenditure on entertainment was not disallowable by ignoring the amended provisions of section 37(2A) with effect from April 1, 1976 ?"
2. As regards question No. 1, we have already directed a similar question to be referred to this court in respect of the assessment year 1976-77. A question similar to question No. 2, has been declined to be referred by us in I.T.C. No. 69 of 1983 (CIT v. Bharat Commerce and Industries Ltd. (No. 1) [1990] 184 ITR 90).
3. As regards question No. 3, the respondent had purchased dehumidification plant worth Rs. 6,20,213. This was for the respondent's project which was to commence at Cabal. This project did not commence. Ultimately, the respondent claimed realisable value of about rupees 3 lakhs and claimed revenue loss of Rs. 3,20,213. The income-tax Officer treated this as a capital loss, but in appeal this decision was reversed. In our opinion, the question has not been properly worded and the question whether Rs. 3,20,213 is a revenue or a capital loss appears to be a mixed question of fact and law and this should be referred.
4. As regards question No. 4, in our decision in Income-tax Case No. 69 of 1984 ([1990] 184 ITR 90), similar question has not been referred.
5. Question No. 5 has to be referred, following our decision for the assessment year 1976-77.
6. We, accordingly, direct the Tribunal to state the case and refer the following questions of law to this court :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the expenditure of Rs. 4,38,329 on setting up a project in Indonesia was not of capital nature ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the loss of Rs. 3,20,213 was a revenue loss ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the sum of Rs. 86,386 was an allowable expenditure ?"
7. There will be no order as to costs.
