COMMISSIONER OF INCOME TAX Vs. ORKAY KNITTING INDUSTRIES

JUDGEMENT

(1.) IN this Departmental reference relating to the assessee's assessment for year 1970-71, the income-tax Appellate Tribunal has referred to this Court the following two questions of law for opinion under s. 256 (1) of the IT Act.

(2.) AS regards the second question of law, the counsel are agreed that in view of the Supreme court's decision in the case of CIT vs. B. C. Srinivasa Setty (1981) 21 CTR (SC) 138 : (1981)128 ITR 294 (SC), the question has to be answered in the affirmative and in favour of the assessee. The question is so answered.

(3.) QUESTION No. 1, it appears to us, has not been framed properly, inasmuch as, the real controversy has been, as to whether when the depreciation is allowed under s. 32 (1) (iii) and the asset on which depreciation is allowed, is sold during that year, the allowance of depreciation is hit by the provisions of s. 34 (2) (ii ). However, the question framed does not, as stated earlier, bring out the controversy. Accordingly, we reframe the question of law as under :