COMMISSIONER OF INCOME TAX Vs. COCHIN REFINERIES LTD

JUDGEMENT

(1.) REVENUE has questioned correctness of the decision rendered by the Appellate Tribunal, Cochin Bench (in short 'the Tribunal') on two questions. Pursuant to the direction given by this Court by order dt. 1st March, 1996, the following questions by this Court by order dt. 1st March, 1996, the following questions have been referred for the opinion of this Court under section 256(2) of the Income Tax Act, 1961 (in short 'the Act') :

(2.) FACTUAL position which is undisputed is as follows : Assessee is a public limited company. It is engaged in the business of refining crude oil. It claimed investment allowance on the computer installed by it for the assessment year 1984 85. There was a fire in its business premises on 8th March, 1984 and substantial damage was caused to the assets. It has received total payment of Rs. 13.28 crores on various dates from the insurance company. Out of the above sum, the assessing officer brought to tax a sum of Rs. 32,92,692 as taxable profit by application of s. 41(2) of the Act. So far as the claim of investment allowance on the computer is concerned, the same was disallowed on the ground that it was not (sic) an office appliance. The views of the assessing officer were affirmed on both counts by the Commissioner (Appeals) (in short "the Commissioner (Appeals)). On Second Appeal, the Tribunal accepted assessee's stand regarding grant of investment allowance on the computer as well as non-taxability under section 41(2) of the Act. Application filed by the Revenue for reference under section 256(1) was rejected. Pursuant to the direction given by this Court, the Tribunal referred the above quoted questions to this Court for opinion under section 256(2) of the Act.

(3.) IN order to appreciate the rival submissions, a reference to s. 41(2) of the Act is necessary. The said provision as it stood at the relevant point of time reads as follows :