CIT Vs. JAI PRAKASH ASSOCIATES (P) LTD

JUDGEMENT

(1.) 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 opinion to this Court: Questions at the instance of department '1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the assessee is entitled to investment allowance under section 32A of the Income Tax Act, 1961

(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal was legally justified in deleting the disallowance of interest paid on deposits in excess of interest at the rate of 15 per cent per annum Questions at the instance of assessee '1. Whether, on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was legally correct in holding that the value of free residential accommodation provided by the assessee -company to its directors and employees should not be computed as per rule 3(e)(iii) of the Income -tax Rules, 1962, for the purpose of computing the disallowance under sections 40(c) and 40A(5) of the Income Tax Act, 1961, even though on similar facts and in similar circumstances such computation under rule 3(a)(iiz) was upheld by the Tribunal in the assessment year 1983 -84 ? 2. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the expenditure on running and maintenance of jeeps as distinguished from such expenditure on motor cars should also be included for the purpose of computing the disallowance under section 37(3) of the Income Tax Act, 1961 ?

(3.) WHETHER , on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was justified in upholding the finding of the Commissioner (Appeals) rejecting the additional ground raised by the appellant before him claiming a deduction of Rs. 4,87,892 ?' 2. Briefly stated the facts giving rise to the present reference are as follows: The dispute relates to the assessment year 1985 -86. 3. The assessee -company is engaged in the business of construction of tunnels, bridges, roads, etc. It claimed investment allowance under section 32A of the Act. The claim of investment allowance was disallowed by the assessing officer but was accepted in appeal by the Commissioner (Appeals) as well as in further appeal by the Tribunal. The controversy raised by the question No. 1 at the instance of the department with regard to the investment allowance to a building contractor has been settled by the Supreme Court in CIT v. N.C. Buddha Raja and Co. : [1993]204ITR412(SC) , wherein it has been held that the construction of road, tunnels, bridges does not amount to production of any article or thing within the meaning of section 32A of the Act. Therefore, to such contractor's investment allowance is not allowable. 4. Respectfully following the aforesaid judgment of the Supreme Court, we answer the question No. 1 in negative, i.e., in favour of the department and against the assessee.