BANARAS STATE BANK VS COMMISSIONER OF INCOME TAX, 1992 PTD-ALLAHABAD-HIGH-COURT-INDIA 828 (1990)

Income-tax---

----Reference---Business expenditure---Bonus---Time when liability for bonus arose---Question of law.

Held, that the question whether the Tribunal was justified in finding that accrual of liability for bonus of Rs.6 lakhs arose after the accounting year was a question of law.

State Bank of Travancore v. CIT (1986) 158 ITR 102 (SC) ref.

Upadhyaya for the Petitioner.

JUDGMENT

B.P. JEEVAN REDDY, CJ.---By this application, the assessee is asking the following four questions to be referred under section 256(2) of the Income-tax Act, 1961:

"1. Whether the Income-tax Appellate Tribunal was justified in finding that accrual of liability of bonus of Rs.6 lakhs arose after the accounting period?

2. Whether the Income-tax Appellate Tribunal was justified in finding that there was real income on sticky accounts on which no interest was charged?

3. Whether the Tribunal was justified in not considering and accepting the bona fide change in system of accounting from the mercantile to cash system on sticky accounts and charging interest on these accounts?

4. Whether, on accounts whose operation was closed for more than three years, in view of the circular of September 1984, the Income-tax Appellate Tribunal was justified in charging interest and not accepting the bona fide change of accounting from mercantile to cash on these accounts?"

Learned counsel for the petitioner, Sri Upadhyaya, stated fairly that so far as questions Nos. 2, 3 and 4 are concerned, they are concluded against the assessee by the decision of the Supreme Court in State Bank of Travancore v. CIT (1986) 158 ITR 102.

Accordingly, the said questions cannot be referred.

So far as question No.1 is concerned, we are inclined to hold that it arises from the order of the Tribunal. Accordingly, question No.1 alone shall be stated by the Tribunal under section 256(2) of the Income Tax Act.

The Income-tax application is, accordingly, allowed in part.

M.BA./1543/TApplication partly allowed.