COMMISSIONER OF INCOME-TAX VS CADILA CHEMICALS
2001 P T D 1238
[244 I T R 28]
[Supreme Court of India]
Present: S. P. Bharucha, V. N. Khare and N. Santosh Hegde, JJ
COMMISSIONER OF INCOME‑TAX
Versus
CADILA CHEMICALS
Civil Appeals Nos. 1650 and 1651 of 1994 with 4573 of 1998, 2385 and 2386 of 1994, decided on 23/02/1999.
(Civil Appeals Nos. 1650 and 1651 of 1994 were by special leave from the judgment and order, dated October 15, 1992 of the Gujarat High Court in I. T, As. Nos. 194 and 195 of 1992).
Income‑tax‑‑‑
‑‑‑‑Reference‑‑‑Business expenditure‑‑‑Company‑‑‑Disallowance of expenditure‑‑‑ Amount paid as premium for purchase of deferred annuity policies in respect of Managing Director‑‑‑Whether allowable‑‑‑Question of law‑‑‑Indian Income Tax Act, 1961, Ss. 40A & 256.
Held, that the questions whether the Tribunal was right in law and on facts in deleting the addition under section 40A(5) of the Income Tax Act, 1961, in respect of premium paid for the purchase of deferred annuity policies in respect of the two Managing Directors and whether the Appellate Tribunal was right in distinguishing the decision of the Gujarat Steel Tubes Ltd. v. E.I.T. (1994) 210 ITR 358 (Guj.) were question of lam, to be referred to the High Court.
C.I.T. v. Russel (L.W.) (1964) 53 ITR 91 (SC) and Gujarat Steel Tubes Ltd. v. C.I.T. (1994) 210 ITR 358 (Guj.) ref.
M. L Verma, Senior Advocate (B.K. Prasad and Girish Chander, Advocates with him) for Appellant.
Amit Dhingra and P. H. Parekh, Advocates for Respondent.
ORDER
The question raised in these three appeals, relating to three different sets of assessment years, are common. They read thus:
"(i)Whether the Tribunal is right in law and on facts in deleting the addition under section 40A(5) of the Income Tax Act, 1961, in respect of premium paid for the purchase of deferred annuity policies in respect of two managing directors?
(ii)Whether the Appellate Tribunal is right in distinguishing the decision of the Gujarat Steel Tubes Ltd.'s case (1994) 210 ITR 358?"
It is difficult to understand why the Tribunal declined to refer these questions to the High Court. The High Court took the view that they need f not be referred because the issue was settled by the decision of the Supreme Court in C.I.T. v. L. W. Russel (1964) 53 ITR 91.
Learned counsel for the appellant‑Revenue submitted that the decision in L. W. Russel's case (1964) 53 ITR 91 (SC), aforementioned concluded the matter in so far as it related to the employee while the present proceedings related to the availability of the deduction in so far as the employer was concerned. He also submitted that the Gujarat High Court, in a matter relating to the employer, Gujarat Steel Tubes Ltd.'s case (1994) 210 ITR 358, had taken a view which favoured the Revenue. There was, therefore, a question of law to be considered and the High Court ought to have called upon the Tribunal to refer the questions to it for determination, Learned counsel for the assessee, fairly, did not dispute that, in any event, the questions of law arose which required determination by the High Court,
We make it clear that we do not express any view on the questions but, clearly, the questions are questions of law and their consideration by the High Court is requisite.
The appeals are allowed. The orders under appeal are set aside. The applications made by the Revenue under section 256(2) of the Income‑tax Act are allowed. The Tribunal is directed to refer the questions to the High Court for consideration, having drawn up the requisite statement of cases. No order as to costs.
M.B.A./462/FCAppeals allowed.