COMMISSIONER OF INCOME TAX Vs. AHMEDABAD CRUCIBLE COMPANY

JUDGEMENT

(1.) THE present reference is one under section 256(1) of the Income -tax Act, 1961, and the relevant assessment year is 1969 -70.

(2.) THE assessee is a registered firm and had sold its machinery, plant, factory, building, etc. The assessee disclosed profits under section 41(2) and the consequential long -term capital gains in its return of income. The Income -tax Officer determined the long -term capital gains at Rs. 96,728 and profits under section 41(2) of the Income -tax Act, 1961, at Rs. 60,643. He also granted consequential relief under section 80T of the Income -tax Act so far as long -term capital gains were concerned. The assessee carried the matter in appeal before the Appellate Assistant Commissioner and, in the said appeal, contended that the sale of its plant, machinery, factory building, etc., was accompanied by its quota rights as well as licence held by the assessee and, therefore, in arriving at the assessee's profit under section 41(2) of the Act, as well as long -term capital gains, a deduction should have been allowed in respect of the value of the quota rights and the licence. It was contended that this claim should be considered on the merits in the interest of justice although it was not specifically so claimed before the Income -tax Officer. It was thus claimed that the value of the quota rights and licence should be deducted from the total consideration. The Appellate Assistant Commissioner accepted this contention and allowed the same and directed the Income -tax Officer to re -examine the claim of the assessee accordingly and the original assessment was set aside.

(3.) IT is this decision which is referred to us by way of the present reference wherein the question raised for our consideration are as under :