COMMISSIONER OF INCOME TAX Vs. GOODYEAR INDIA LIMITED

JUDGEMENT

(1.) By this petition under Section 256(2) of the Income-Tax Act, 1961 (for short 'the Act'), the Revenue seeks a direction to the Income-tax Appellate. Tribunal, Delhi Benches, (for short 'the Tribunal') to state the case and refer the following questions, said to be of law, for th6 opinion of this Court:

(2.) The Assessing Officer felt that since under the said agreement the assessee was to get designs and drawings for the manufacture of tyre making machines, all the auxiliary equipments and technical data for manufacture of extra large tyres, it had acquired anew asset for the production of a new product and, therefore, the payment to foreign collaborator had to be regarded as capital in nature. The view taken by the Assessing Officer was affirmed by the Commissioner of Income-tax (Appeals). However, in further appeal to the Tribunal, while holding that the said expenditure had to be regarded as revenue in nature, the Tribunal observed as follows: "'

(3.) The next issue relates to the addition of Rs. l,13,81,810.00 under Section 43-B of the Act in respect of the excise duty paid and embedded in the valuation of closing stock as on 31st December, 1983. The assessee furnished before the Assessing Officer details of the unpaid statutory liabilities to the tune of Rs. 3,12,63,796.00 . Out of the said amount, a sum of Rs.l,98,81,986.00 was added in the computation of the total income by the assessee itself. However, in respect of the balance amount of Rs. l,13,81,810.00 ; the assessee claimed that there was change in the method of valuation of closing stock regarding the finished goods and in consonance with such change, the assessee had re duced the value of the closing stock by the said amount. The explanation furnished was not found convincing by the Assessing Officer, who added the said amount to the total income by taking recourse to the provisions of Section 43-B. The Commissioner of Income Tax (Appeals) endorsed the view taken by the Assessing Officer. The Tribunal, however, accepted the plea of the assessee that the issue stood concluded in its favour by a decision of the Special Bench of the Tribunal in the case of Indian Communication Network Private Limited Vs. IAC. Accordingly, following the said decision, the Tribunal directed the Assessing Officer to deduct the said amount from the value of the closing stock with the observation that the opening stock for the subsequent assessment year will also to be reduced by the same figure.