SANKARANARAYANA CONSTRUCTION CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference made under S. 256(1) of the IT Act, 1961 ("Act" called shortly), the following question has been referred for the opinion of this Court:

(2.) THE answer to this question turns on the scope of S. 32(2) of the Act which has given rise to acute conflict of judicial opinion.

(3.) THE assessee's further appeal to the Tribunal was also dismissed. Before the Tribunal the assessee-firm placed strong reliance on the decision of the Bombay High Court in Ballarpur Collieries Co. vs. CIT (1973) 92 ITR 219 and the Department relied upon the decisions of the Gujarat High Court in CIT vs. Garden Silk Wvg. Factory (1975) 101 ITR 658, the decision of the Allahabad High Court in K. T. Wire Products vs. Union of India (1973) 92 ITR 459 and the decision of the Delhi High Court in Raj Narain Agarwala vs. CIT (1970) 75 ITR 1. THE Tribunal preferred the view taken by the Gujarat, Allahabad and Delhi High Courts as against the view taken by the Bombay High Court and confirmed the disallowance.