COMMISSIONER OF INCOME-TAX VS ARDHMAN SPINNING AND GENERAL MILLS LTD., 2000 PTD-PUNJAB-AND-HARYANA-HIGH-COURT-INDIA 3248 (1998)

(a) Income-tax---

----Reference---Depreciation---Extra-shift allowance---Extra-shift allowance whether can be granted in respect of transformers, electric sub-station and electric motors---Question of law---Indian Income Tax Act, 1961, Ss.32 & 256---Indian Income Tax Rules, 1962, R.5.

Held, that the question, whether on 'the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing extra-shift allowance on transformers, electric sub-station and electric motors which are stationary installations, was a question of law.

(b) Income-tax---

----Reference---Business expenditure ---Ependiture on guest house---Revenue accepting deduction in respect of other assessment years in the case of the same assessee---Question declined to be referred---High Court would not direct reference of question whether expenditure on guest house was deductible---Indian Income Tax Act; 1961, Ss.37 & 256.

The question relating to guest house expenses was not a referable question of law. The Revenue had either accepted the view of the Income-tax Appellate Tribunal on this question in respect of other assessment years in the case of the assessee or the question had already been declined by the Tribunal or the High Court, being not a referable question of law. The question could not be directed to be referred.

CIT v. Kshma Tandon (Smt.) (1992) 194 ITR 751 (All.); CIT v: Modipon Ltd. (No.2) (1995) 212 ITR 656 (Delhi); CIT v. Murugappa Chettiar (S.) (1992) 197.ITR 575 (Ker); G.N.A. Enterprises (Private) Limited v. CIT (1996) 219 ITR 400 (P&H) and Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) ref.

R.P. Sawhney, Senior Advocate and Rajesh Bindal for the Commissioner.

B.S. Gupta, Senior Advocate and Sanjay Bansal for the Assessee.

JUDGMENT

G. C. GARG, J.---The Commissioner of Income-tax, Ludhiana, in this petition under section 256(2) of the Income Tax Act, 1961, has prayed that the Income-tax Appellate Tribunal, Chandigarh Bench may be directed to draw up a statement of the case and refer the following questions of law to this Court for its opinion:

(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing extra -shift allowance on transformers, electric sub-station and electric motors which are stationary installations?

(2) Whether, on the facts and in, the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing guest house expenses when they are not allowable as per section 37(4) of the Income Tax Act,. 1961?

According to the Revenue these questions do arise from the order of the Tribunal, dated March 31, 1997 in the case of the assesssee for the assessment year 1985-86.

In response to the notice of motion Mr. Sanjay Bansal, Advocate, appearing with Mr. B.S. Gupta, Senior Advocate, has put in appearance for the assessee. According to the learned counsel for the assessee no referable question of law arises, from the order .of the Tribunal, dated March 31, 1997.

Learned counsel for the assessee, Mr. Sanjay Bansal, submitted that guest house expenses were allowed by the Tribunal by its order, dated June 29, 1990, in the case of the assessee for the assessment year 1982-83 and the Revenue did not seek any reference. Similarly, disallowance with regard to guest house expenses was deleted and extra-shift allowance was allowed on transformers, electric sub-station and electric motors by the Income-tax Appellate Tribunal for the assessment year 1984-85 in the case of the assessee~ by order, dated March 10, 1995, in I.T.A. No. 132/Chandigarh of 1990. According to learned counsel; the Revenue did not seek a reference on guest house expenses, but did seek a reference on extra-shift allowance being granted on electric installations, transformers and weighing scales. The Tribunal, however, granted reference on generator and weighing scales vide its' order, dated October 13, .1995, relating to the assessment year 1984-85. The Income-tax Appellate Tribunal only followed its previous view during the assessment. year 1985-86 (year in question). and 1986-87. The Revenue sought a reference relating to similar questions as in this case relating to assessment year 1986-87 .in the assessee's case and reference petition registered as I.T.C. No.68 of 1996 has already been dismissed. In the above premises counsel submitted that this petition deserves to be dismissed.

Mr. Bansal, placing strong reliance on Radhasoami Satsong v. CIT (1992) 193 ITR 321 (SC); CIT v. Murugappa Chettiar (S.) (1992) 197 ITR 575 (Ker.); CIT v. Kshma Tandon (Smt.) (1992) 194 ITR 751 (All.) and CIT v. Modipon Ltd. (No.2) (1995) 212 ITR 656 (Delhi), submitted that even on the principle of constructive res judicata this petition deserves to be dismissed as the Revenue did not either seek a reference under section 256 or it was declined.

We have heard learned counsel for the parties and have also perused the record.

As regards question No.2 relating to guest house expenses, we are of the opinion that this question. is not a referable question of law. The Revenue has either accepted the view of the Income-tax Appellate Tribunal on this question in respect of other assessment years in the case of the assessee or the question has already been declined by the Tribunal or this Court, being not a referable question of law arising from the order of the Tribunal. We, thus, see no ground to grant this question, it being not a referable question of law.

In so far as question No. 1 As reproduced above is concerned, it may also be noticed that for the assessment year 1986-87 in the case of the assessee the same question did arise. The reference sought by the Revenue, however, was declined by this Court in I.T.C. No.68 of 1996 by order, dated December 3, 1996. In the normal course, we would have declined the reference on this question as well, but there is another aspect of the matter. In the case of G.N.A. Enterprises (Private) Ltd. v. CIT (1996) 219 ITR 400 (P&H), this Court came to the conclusion that the following two questions of law are questions of law and thus, directed the Tribunal to refer these questions of law alongwith the statement of the case to this Court for its opinion:

(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that machinery in the form of diesel engine, transformer, electric switchgears and air circuit breaker valuing Rs.3,04,748 was not machine tool automatic, semi automatic entitled to depreciation at 15 percent. within the meaning of item No. III(B)(8) of Appendix I to rule 5 of the Income-tax Rules, but was general machinery entitled to ten percent.?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in sustaining the view that extra-shift allowance on transformer, electric switchgear and air circuit breaker valuing Rs.1,87,374 was not allowable in view of sub-part 3 (special rates) of Annexure-I to rule 5 as electric machinery as mentioned in Serial No. 1 and not special machinery as Part III(B)(8) and C(4) of Appendix I to rule 5 of the Income Tax Rules?

More or less same was the view taken in I.T.C. No.23 of 1990, decided on February 25, 1997.

In view of the above we are of the opinion that question No. 1 is a question of law which arises from the order of the Tribunal. We thus, direct the Tribunal to refer the following question of law alongwith the statement of the case for the opinion of this Court:

(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing extra- shift allowance on transformers, electric sub-station and electric motors which are stationary installations?

The petition thus, stands disposed of. No costs.

M.B.A./55/FC

Order accordingly.