COMMISSIONER OF INCOME TAX Vs. KUMARAN AND CO

JUDGEMENT

(1.) THE Revenue is the petitioner herein. THE respondent assessee is a firm. It is an abkari contractor. THE matter relates to the assessment year 1982-83. Amounts of Rs. 13,65,487 and Rs. 1,14,321 were debited in the profit and loss account, being the kist payable and the interest thereon, respectively, for the assessment year 1982-83. THE full amount of kist was not paid by the assessee. THEre were litigations regarding the amount of kist, interest and the process of recovery proceedings. THE matter came up before this court in Issac v. Assistant Excise Commissioner, 1984 KerLT 88. THE Income-tax Officer disallowed the amount of kist and interest mentioned above and added back the same to the total income of the assessee. In appeal, the Commissioner of Income-tax (Appeals) held that at least the sums of Rs. 6,83,250 and Rs. 1,12,990 towards kist and interest would be admissible deductions. In further appeal, by the respondent/assessee, the Appellate Tribunal held that the entire amount of Rs. 14,79,808 would be allowed as deduction. THEreafter, the Revenue filed an application under section 256(1) of the Income-tax Act for referring the questions of law formulated in para 7 of the original petition, for the decision of this court. It was declined by the Appellate Tribunal by its order dated April 30, 1987. THEreafter, the Revenue has filed this original petition, under section 256(2) of the Act, praying that the Appellate Tribunal may be directed to refer the questions of law formulated in para 7 of the original petition for the decision of this court. THE questions are as follows:

(2.) WE heard counsel for the Revenue as also counsel for the respondent-assessee. The Appellate Tribunal has adverted to the decision of this court in Issacs case, [1984] KLT 88 as also the decision of the Supreme Court in Kedarnath Jute Manufacturing Co. Ltd. v. CIT, 1971 82 ITR 363 and the decision of the Bombay High Court in CIT v. Babulal Narottamdas, 1976 105 ITR 721. According to the Tribunal, the effect of the decision in Issacs case, [1984] KLT 88 is only to restrain the Government from taking any coercive steps for recovering the kist amount and interest alleged to be due from the assessee till the quantum thereon is property determined on a reasonable and fair basis and the liability to pay the kist and interest is not at all obliterated and wiped out by the judgment of this court in Issacs case, [1984] KLT 88. It was further stated that the decision of the Supreme Court in Kedarnath Jute Manufacturing Co.s case , [1971]82ITR363(SC) , governs the matter and the liability to pay the balance of kist and interest was very much there on March 31, 1982, relevant for the assessment year 1982-83. It is on this basis that the entire amount of Rs. 14,79,808 was held to be an allowable deduction.

(3.) QUESTION No. 3, formulated in para 3 of her original petition, is purely a hypothetical and legal one. The scope of a legal decision is well settled. A legal decision declares the law. We do not think that question No. 3 formulated in para 7 of the original petition is referable question of law.