COMMISSIONER OF INCOME TAX Vs. KASTURI PALAYACAT CO

JUDGEMENT

(1.) ALL these references raise a common point. In T.C. No. 842 of 1977, relating to the assessment year 1969-70, the following question has been referred to this court :

(2.) IN. T.C. No. 115 of 1976, relating to the assessment year 1970-71, the following question has been referred :

(3.) THE Addl. CIT examined the records and came to the conclusion that the ITO, in allowing the sum of Rs. 50,386 had acted prejudicially to the interests of the revenue. He, therefore, took proceedings under Section 263 of the Act. He found that part of the expenditure had been incurred prior to February 29, 1968, and that such expenditure could not be brought within the category of expenses to be considered under Section 35B, which dealt with expenses incurred after February 29, 1968. He gave the necessary notice to the assessee to explain why the entire amount could not be disallowed, and after hearing the assessee's objection, he came to the conclusion that the overhead expenses of the branch could not be said to have been incurred for the purpose of the assessee's business in exports and that the assessee was not, therefore, entitled to the allowance of Rs. 50,385. He directed the ITO to modify the assessment accordingly.