COMMISSIONER OF INCOME TAX Vs. ELPRO INTERNATIONAL LIMITED

JUDGEMENT

(1.) FOUR questions have been referred to us by the IT Tribunal, Bombay Bench "B", under S. 256(1) of the IT Act, 1961. The reference was made at the instance of the Revenue and the assessee had not filed a reference application. This fact is important when we consider question No. (3) referred to us. The four questions referred to us are as under :

(2.) OF these four questions, questions Nos. (1), (2) and (4) arise from the appellate order wherein the decision was against the Revenue and it was the Revenue which had sought reference in respect of these three questions. However, as far as the computation of capital for the purpose of relief/deduction under S. 84/80J for the asst. year 1967 68 is concerned, the decision of the Tribunal went against the assessee and the Tribunal held that the AAC was not right in including those three items in the computation of capital. This was done on the basis of applying the express phraseology to be found in r. 19 of the IT Rules, 1962, which was operative during the said assessment year. The said rule required the asset acquired after the first date to be used during that year for the purpose of making necessary computation and the Tribunal was of the opinion that since these amounts could not refer to any asset which could be said to have been used during the year, the amounts cannot be taken into account for the purpose of making the capital computation.

(3.) THIS brings us to a consideration of question No. (4). Sec. 80J of the IT Act, 1961, and r. 19A of the IT Rules, 1962, came to be directly considered by a Division Bench of this High Court in CIT vs. Advani Oerlikon (P) Ltd. (1986) 52 CTR (Bom) 174:(1986) 161 ITR 449(Bom). In accordance with that decision, question No. (4) is required to be answered in the affirmative and in favour of the assessee. In passing, we may add that Advani Oerlikon's case (supra) has followed the previous decision of this High Court in CIT vs. Alcock Ashdown and Co. Ltd. (1979) 8 CTR (Bom) 223:(1979) 119 ITR 164 (Bom) in which the Division Bench had followed the decision of the Calcutta High Court in CIT vs. Indian Oxygen Ltd. (1978) 113 ITR 109 (Cal). In the earlier decision, the Court was directly concerned with r. 19 which was applicable for the asst. year 1967 68. Thus, had the assessee sought a reference and question No. (3), which we have refrained from answering by reason of the decision of the Supreme Court, had been referred to the High Court at the instance of the assessee on its application for reference, the assessee might have been entitled to succeed even in respect of the point decided against it by the Tribunal and covered by question No. (3). However, we are precluded by the observations of the Supreme Court and are, therefore, constrained from giving an answer to question No. (3).