Delhi High Court
Commissioner Of Income Tax vs Escorts Ltd. on 24 September, 1992
Bench: B Kirpal, P Bahri
JUDGMENT
1. I. T. C. No. 109 of 1990 :
The petitioner seeks reference of the following five questions :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in confirming the order of the Commissioner of Income-tax (Appeals) deleting the addition of Rs. 7,500 on account of payment made to Shri P. L. Jaitley and Rs. 10,000 out of the disallowance made in respect of payment to Messrs. S. R. Dinodia and Co. ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in not recording a specific finding on the merits on the issue raised in the Departmental appeal that the Commissioner of Income-tax (Appeals) wrongly allowed the relief of Rs. 2,33,881 on account of land development cases ?
3. (a) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in confirming the decision of the Commissioner of Income-tax (Appeals) that the Escorts Employees' Welfare Trust was a valid trust and as such the contribution to the trust is allowable under section 37(1) ?
(b) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in rejecting the Revenue's ground against the deletion by the Commissioner of Income-tax (Appeals) of the addition of Rs. 6,708 made on account of interest earned by Escorts Employees' Welfare Trust ?
4. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in confirming the deletion by the Commissioner of Income-tax (Appeals) of the addition of Rs. 1,20,884 under the head "Advertisement" on account of expenses on the inauguration ceremony of C. G. R. India Ltd. ?
5. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in confirming the order of the Commissioner of Income-tax (Appeals) that relief under section 35B is allowable on 65 per cent. of the expenses incurred outside India in farm equipment division and spare parts division and also in respect of commission of Rs. 1,76,339 paid to Project Equipment Corporation of India ?"
2. As far as question No. 1 is concerned, a similar question was sought to be raised in I. T. C. No. 119 of 1990. By a separate order passed today, that question was not called for by us. Following the said decision, we hold that question No. 1 which is proposed need not be called for.
3. As far as question No. 2 is concerned, the said question really does not arise from the order of the Tribunal and, in any case, when the Tribunal had come to the conclusion that the assessed was entitled to a deduction on the ground that it was a revenue expenditure, it need not have decided this question.
4. As far as question No. 3(a) is concerned, the finding of the Tribunal that the Trust was a genuine one is a pure finding of fact. Question No. 3(b) is consequential to question No. 3(a) and none of these two questions need be called for.
5. As far as question No. 4 is concerned, it is again a question of fact. The Tribunal has held that the expenditure which was incurred at the inauguration ceremony was in the nature of an advertisement and so the said expenses were allowable as a deduction. In our opinion, the decision of the Tribunal in regard to this question does not call for any interference.
6. As far as question No. 5 is concerned, the answer to the first part relating to liability of 65 per cent. of the expenses is self-evident. With regard to payment to the Project Equipment Corporation of India, a question of law does arise. Therefore, we direct the Tribunal to state the case and refer the following question to this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing deduction of commission of Rs. 1,76,339 paid to Project Equipment Corporation of India in India ?"
7. There will be no order as to costs.
