PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED CHANDIGARH Vs. COMMISSIONER OF INCOME TAX PATIALA

JUDGEMENT

(1.) The question referred for decision reads as under:

(2.) Since there was a conflict of opinion on this point amongst the various high courts it was thought expedient by the Income Tax Appellate tribunal, chandigarh bench, to directly refer the question for decision by this court under Section 257 of the Income Tax Act. The factual background in which the question arises for determination is that the applicant M/s Punjab State industrial Development Corporation Ltd. , filed the return of its total income declaring an income of Rs. 13,83,049. 00 on 30/6/1979. In the Profit and Loss account an amount of Rs. 1,50,000. 00 was claimed as revenue expenditure, the same having been paid to the Registrar of Companies as filing fee for enhancement of capital of the company. The Inspecting Assistant commissioner of Income Tax (Assessment) , Chandigarh, allowed the expenditure but the Commissioner of Income Tax, Patiala in exercise of power conferred on him under Section 263 of the IT Act revised the order suo motu as in his view the expenditure of Rs. 1,50,000. 00 was wrongly allowed as revenue expenditure. He, therefore, enhanced the income computed by the lower authority by the amount of Rs. 1,50,000. 00 and directed that the assessment be revised accordingly. Feeling aggrieved by the said order, the assessee preferred an appeal before the Income Tax Appellate tribunal. The tribunal upheld the order of the Commissioner placing reliance on the judgment in Groz-Beckert Saboo Ltd. v. commissioner OF INCOME TAX of the Punjab and Haryana high court. It was thereafter that a reference was sought under Section 256 (1 of the IT Act, but as stated above, in view of the conflict of opinion amongst the High courts in the country the question has been directly referred to this court for determination.

(3.) The issue has been answered in favour of the assessee and against the revenue by the High courts of Madras, Karnataka, A. P. and , kerala in the following decisions: commissioner OF INCOME TAX v. Kisenchand Chellaram (India) (P) ltd. , Warner Hindustan Ltd. v. commissioner OF INCOME TAX , Hindustan Machine Tools Ltd. (No. 3 v. commissioner OF INCOME TAX and Federal Bank Ltd. v. Commissioner of Income Tax. The High courts of Allahabad, himachal Pradesh, Delhi, Calcutta, Bombay, Punjab, Gujarat, Andhra pradesh and Rajasthan have held in favour of the Revenue in the following cases: commissioner OF INCOME TAX v. Modi Spg. and Wvg. Mills Co. Ltd. , Mohan Meakin Breweriesltd. v. commissioner OF INCOME TAX (No. 2 , Bharat Carbon and Ribbon Mfg. Co. Ltd. v. commissioner OF INCOME TAX ; brooke Bond India Ltd. v. commissioner OF INCOME TAX , Bombay Burmah Trading Corpn. Ltd. v. CIT , Groz-Beckert Saboo Ltd. v. commissioner OF INCOME TAX ; Ahmedabad Mfg. and Calico (P) Ltd. v. commissioner OF INCOME TAX , commissioner OF INCOME TAX v. Aditya Mills', commissioner OF INCOME TAX v. Multi Metals Ltd. and Vazir Sultan tobacco Co. Ltd. v. commissioner OF INCOME TAX. We may also state that the Calcutta High court has affirmed this earlier view in three subsequent decisions reported in kesoram Industries and Cotton Mills Ltd. v. commissioner OF INCOME TAX , Wood Craft Products Ltd. v. commissioner OF INCOME TAX and commissioner OF INCOME TAX v. Tungabhadra Industries Ltd. and so also the Gujarat high court has affirmed its earlier view in Alembic Glass Industries Ltd. v. CIT.