COMMISSIONER OF INCOME TAX Vs. ALUMINIUM INDUSTRIES LIMITED

JUDGEMENT

(1.) THE Revenue is the applicant in this case. THE respondent-company is an assessee to income-tax. We are concerned with the assessment year 1976-77. THE respondent is carrying on a business in the manufacture of conductors, switch gears and machinery. It claimed weighted deduction of 50% of Rs. 1,62,924 under Section 35B of the Income-tax Act. THE expenses were incurred for maintenance of an export house at Ernakulam. THE claim was disallowed by the Income-tax Officer. THE Commissioner of Income-tax (Appeals) concurred with the said decision. In further appeal, the Income-tax Appellate Tribunal relied upon the decision of the Special Bench of the Tribunal in J. Hemchand and Co.'s case and held that the whole expenditure incurred in the office of the export house is relatable to Clauses (i), (iv), (v) and (vi) of Section 35B of the Act and so the relief in respect of that expenditure to the extent of 50% of Rs. 1,62,924 by way of weighted deduction is allowable. THE appeal filed by the respondent (assessee) was allowed. On a motion by the Revenue, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court:

(2.) WE heard counsel for the Revenue, Mr. Menon, and also counsel for the respondent-assessee. The Appellate Tribunal has found that the expenses, for which relief was claimed, were incurred for maintenance of an office in Cochin. It is an office expenditure. Counsel for the Revenue submitted that in view of the Division Bench decision of this court in CIT v. C. Tharian and Sons [1987] 166 ITR 607, on the finding entered by the Tribunal, the assessee is not entitled to 50% of the deduction by way of weighted deduction. On the other hand, counsel for the respondent-assessee submitted that whatever may be the interpretation placed on Section 35B of the Act by this court, the assessee is entitled to the relief under Section 35B of the Act, in view of the Circular of the Board of Revenue dated December 28, 1981. It is argued that the decision of the Special Bench in Income-tax References Nos. 3255 and 3330 (Bom) of 1976-77 was (substantially) accepted by the Central Board of Direct Taxes and the circular dated December 28, 1981, have been issued in that behalf, The circular, as such, is not produced before us, But reference is made to the said circulars in the decision of the Allahabad High Court in CIT v. Novelty Trading Corporation [1984] 150 ITR 453, 454 and CIT v. Jay Engineering Works [1984] 149 ITR 297, 298 (Delhi). The submission was that the assessee is entitled to the said administrative relief as detailed in the circular and that the relief in the instant case has been allowed in accordance with the decision of the Special Bench in J. Hemchand and Co.'s case which has been substantially accepted by the Central Board of Direct Taxes in the circular dated December 28, 1981, aforesaid.

(3.) WE decline to answer the question posed before us in the above circumstances.