JAI BHARATH TANNERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference at the instance of the assessee. The assessee requested the Income-tax Appellate Tribunal to state a case and refer the following questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the order passed by the CIT U/s.263 of the I.T.Act is valid? 2. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the CIT could validly invoke the provision of section263 of the Act, even though the same does not accord to the instructions given by the Central Board of Direct Taxes in similar situations?

(2.) The Appellate Tribunal, by order dated 24.12.1998, has stated a case and referred only the first question stated above. The Appellate Tribunal rejected the second question on the ground that it was only argumentative in nature and not fit for reference and that the assessee did not produce the Board's instructions before the Tribunal. The assessee, aggrieved by the order of refusal to refer the second question, approached this Court by a writ petition in W.P.No.12910 of 1997 and E.Padmanabhan,J., who heard the writ petition, taking note of the submission of the learned counsel for the assessee and the Revenue, held that it is open to the assessee to challenge the order passed by the Appellate Tribunal and also to rely upon the Board's circular at the time of final hearing of the reference. Learned counsel for the assessee submitted that though this Court has permitted the counsel for the assessee to urge his submissions on the second question, he is not urging any point on the second question. Hence, it is not necessary to consider the same.

(3.) The relevant facts as seen from the statement of case are that the assessee firm was engaged in the business of purchase and sale of tanned and finished hides and the assessee earned some portion of turnover from and out of the export activities carried on by the assessee. The assessee for the assessment year 1986-87 filed a return of income disclosing a total income of Rs.10,32,500/- and admitted in Part/III of the return firstly, the premium on sale of import entitlements of Rs.68,900/- and secondly, cash compensatory support of Rs.8,59,373/-. The assessee also claimed deduction under section 80HHC of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') of Rs.4,58,356/- and a sum of Rs.6,04,780/- under section 80 HH of the Act. The assessee claimed in its return that the amounts representing the premium on sale of import entitlements and the amount received towards cash compensatory support were liable to be exempt.