Commissioner Of Income Tax vs J.K. Synthetics Ltd.
1995 Latest Caselaw 233 Del

ORDER

Dr. M.K. Sharma, J.

1. By this application filed under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the Act), the Revenue seeks to have the following questions stated to be questions of law, referred to this Court, for its opinion :

1. Whether the Tribunal was right in law on facts in holding that 50% depreciation is admissible to the assessee on machinery installed at the premises of J.K. Cotton Spg. & Weaving Mills ?

2. Whether the Tribunal was right in law on facts and in circumstances in confirming the deletion of disallowance of Rs. 3,24,547 on account of interest and insurance on funds invested in the purchase of machinery installed at the premises of J.K.C.N. & F.P.L. ?

3. Whether the Tribunal was right in law on facts in directing the ITO to exclude the cash allowance from perquisites while considering the disallowance under s. 40A(5) ?

4. Whether the Tribunal was right in law on facts and in circumstances in allowing the liability on account of additional excise duty pertaining to assessor's production for the current year ?

5. Whether the Tribunal was correct in law on facts and in circumstances in holding that retainer ship fee paid was outside the scope of s. 80VV. ?

6. Whether the Tribunal was correct in law on facts and in circumstances in allowing expenses relating to Kenya Project of Rs. 3,13,425 expenses relating to purchase of machinery of Rs. 94,421 and expenses on staff deputed to Kenya of Rs. 74,110 ?

7. Whether the Tribunal was correct in law on facts and in law in holding that the expenses incurred at Rs. 64,062 on presentation of articles to the employees of the foreign collaborators was allowable business expenditure ?

8. Whether the Tribunal was correct in law on facts and in circumstances in holding that expenses incurred on account of excess luggage of the employees was a business expenditure ?

9. Whether the Tribunal was correct in law and on facts in directing the ITO to allow weighted deduction under s. 35B on the salary of Rs. 5 lacs to staff handling export business and on expenses of Rs. 3,48,043 incurred in connection with Kenya Project ?

10. Whether the Tribunal was correct in law on facts and in circumstances of in holding that Acrylic unit and Cement Unit No. 2 was new undertaking and as such relief under s. 80J is admissible ?

11. Whether the Tribunal was right in law on facts and in circumstances in holding that foreign tour expenses incurred by the P.A. to the President to be official one and as such admissible ?

12. Whether the Tribunal was correct in law on facts and in circumstances in holding that only a sum of Rs. 30,842 was in the nature of entertainment expenditure, out of Rs. 4,10,658 which were claimed as sales promotion expenses and the balance were in the nature of sales promotion expenses and should be processed under s. 37(3A) ?

13. Whether the Tribunal was correct in law on facts in holding that the assessee was entitled to depreciation @ 15% on machinery & plant installed in S.S.F., tyre cord, rayon and acrylic units ?

14. Whether the Tribunal was correct in law on facts in holding that the assessee is entitled to higher depreciation at 15% on machinery engaged in manufacturing of cement and changes bags ?

15. Whether the Tribunal was correct in law in facts and in circumstances in holding that interest relating to pre-production period of Cement Unit No. II is allowable ?

16. Whether the Tribunal was correct in law on facts and in circumstances in holding that expenses amounting to Rs. 14,176 in respect of Calcutta property is an admissible expenditure ?

17. Whether the Tribunal was correct in law on facts in holding that expenses of Rs. 46,835 incurred under the head "Charges General" should be allowed and that there is no need to consider it under s. 37(3A) ?

18. Whether the Tribunal was correct in law on facts and in circumstances in holding that Founder's day expenses of Rs. 8,642 is an admissible expenditure ?

2. With regard to question No. 1 the same is similar to the question which has been raised in earlier petitions which were disposed of by the decisions of this Court reported as CIT vs. J.K. Synthetics Ltd. (1990) 181 ITR 505 (Del), CIT vs. J.K. Synthetics Ltd. (1990) 181 ITR 537 (Del) and CIT vs. J.K. Synthetics Ltd. (1990) 182 ITR 125 (Del) wherein this Court declined to call for the reference of the same. In view of the same, in our opinion no reference is called for on this question.

3. By a judgment of this Court in ITC No. 107/1987 and ITC 108/1987 similar questions like that of question No. 2 have been directed to be referred. For the said reasons this question is also to be referred.

4. With regard to question No. 3, it is contended by the learned counsel for the respondent that in the respondent's own cases for earlier years this Court had not called for this question on the Department's application under s. 256(2) relating to the asst. yrs. 1976-77, 1977-78 and 1978-79. We, however, find that a similar question was directed to be referred to this Court in ITC No. 65/1991 holding that while deciding the earlier cases of the assessee a decision of this Court in CIT vs. Jay Engg. (1988) 174 ITR 133 (Del) was not brought to the notice of the Court, where a similar question was called for by a Division Bench of this Court. As this question involves interpretation of s. 40A(5) and also in view of the fact that similar question has been called for by this Court, as referred to above, we direct the Tribunal to refer the third question to this Court.

5. So far as question No. 4 is concerned, in our opinion the same appears to be an academic question because the answer for the same is self-evident in view of the Supreme Court Judgment in the case of Kedar Nath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC). Accordingly, the said question in our opinion is not a question to be referred to this Court.

6. As regards question No. 5, a similar question has been called for by this Court in ITC Nos. 65/1991, 232/1992 and 231/1992. In view of the aforesaid the said question may also be referred to this Court.

7. So far as question No. 6 is concerned, similar question was sought to be raised in ITC No. 211/87 and 134/88, reference whereof has been declined by this Court. In view of the same we do not find any ground for calling for a reference on this question.

Similarly, question No. 7 pertains to the expenditure towards the presents given to the employees of the foreign collaborators. In our view this is a question of fact and therefore, need not be referred to this Court.

8. So far as question No. 8 is concerned the same is similar to that of Question No. 6 above and accordingly, we decline to call for a reference on this question as well.

9. So far as question No. 9 is concerned, it has two parts. On the perusal of the contents of the said parts of the question, we find that the second part of the question namely the expenses incurred in connection with Kenya Project amounting to Rs. 3,48,043 have already been referred to this Court by the decision of the Tribunal in the application under s. 256(1) of the Act itself. In that view of the matter no order is called for from this Court on the said part of the question.

With regard to the first part of the said question, on the question of weighted deduction under s. 35B on account of salary to staff handling export business, we feel that a question of law does arise from the said part of the question and, therefore, we direct the Tribunal to refer to this Court the said part of the question for its opinion.

10. As regards question No. 10, similar questions were sought to be raised in ITC No. 211/1987 and ITC No. 134/1988, reference whereof has been declined by this Court. Accordingly we do not find any ground for calling for reference on this question.

11. So far as question No. 11 is concerned, a similar question was not called for by this Court in CIT vs. J.K. Synthetics Ltd. (supra) and CIT vs. J.K. Synthetics Ltd. IT Ref. No. 134/1988, following the same we reject the request for calling for reference on this question.

12. As regards question No. 12, in our opinion, the same is a pure question of fact and, therefore, we decline to call for reference on this question.

13. As regards question No. 13, we feel that the said question is a question of law to be referred to this Court for its opinion. Accordingly, we direct so.

14. The learned counsel for the Revenue did not press before us question No. 14 whereas question No. 15 in our opinion is a question of law and is, therefore, referrable to this Court for its opinion. So far as questions No. 16, 17 and 18 are concerned, they are not such questions where reference could be called for by this Court. In our opinion they are not questions of law and, therefore, the Tribunal was right in not referring the said questions to this Court.

15. In the result, we direct the Tribunal to state the case and refer the aforesaid questions No. 2, 3, 5 second part of question No. 9, 13 and 15 to this Court for its opinion. There will be no order as to costs.