COMMISSIONER OF INCOME-TAX Vs. EMA INDIA LTD

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Allahabad, has referred the following question of law under Section 256(2) of the Income -tax Act, 1961 ('the Act') for the opinion of this court: Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was justified in holding that the value of work -in -progress was to be taken at the cost of raw material consumed and no part of direct labour, overheads was allocable to it and that the ratio laid down in CIT v. British Paints India Ltd. : [1991]188ITR44(SC) did not apply to the case?

(2.) THE present reference relates to the assessment year 1986 -87.

(3.) THE assessee had shown value of work -in -progress at Rs. 11,37,495. The work -in -progress was valued by the assessee at cost of raw material used. The overhead expenditure attributable to the machinery components under fabrication were not proportionately included while the alleged expenses had been charged to the profit and loss account. Consequently, the Assessing Officer, while framing the assessment, came to the conclusion that the real value of work -in -progress was not shown and thereby a sum of Rs. 9,78,000 was added.