CAWNPORE TEXTILES LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In Income-tax Reference No. 111 of 1985 which relates to the assessment years 1975-76 and 1976-77, the Income-tax Appellate Tribunal, Allahabad, has referred the following questions of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that depreciation on assets provided to employees of the assessee free of charge required to be included in computing the disallowance under Section 40A(5) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction under Section 35B of the Income-tax Act, 1961, in respect of expenses incurred on export levy and on carriage of goods and insurance, while on transit ? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the assessee was entitled to extra shift allowance in regard to machinery added during the year on the basis of the number of days the particular machinery was actually put to use ? 4. Whether, on the facts and in the circumstances of the case, the cash incentive of Rs. 16,01,547 received by the assessee under the Export Promotion Scheme benefits from the Government represented the income of the assessee taxable within the ambit and scope of the charging provisions of the Income-tax Act, 1961 and was, therefore, rightly included in its total income for the assessment year 1976-77 ?"

(2.) Whereas in Income-tax Reference No. 112 of 1985 which relates to the assessment years 1977-78 and 1978-79, the Tribunal has referred the following questions of law under Section 256(1) of the Act for the opinion of this court :

(3.) Briefly stated the facts giving rise to the present reference are as follows : The applicant is a public limited company which runs a textile mill at Kanpur. It is also engaged in exporting its goods. In respect of the assessment year 1975-76, the Inspecting Assistant Commissioner (Assessment) included the amount of depreciation in respect of furniture provided by the applicant to its managing director, Sri T. N. Sharma, while computing disallowance under Section 40A(5) of the Act. In respect of the assessment years 1976-77, 1977-78 and 1978-79 also he included depreciation on furniture and car while computing disallowance under the aforesaid section in respect of Sri T. N. Sharma and other employees. The claim of the applicant regarding weighted deduction under Section 35B of the Act in respect of its expenses allowing export levy paid to Cotton Textiles Export Promotion Council for carriage of goods from Kanpur to Bombay and other insurance was also rejected on the ground that the expenses were incurred in India and, therefore they were not entitled to weighted deduction under Section 35B(1)(b)(iii) of the Act.