COMMISSIONER OF INCOME TAX Vs. PROJECT AUTOMOBILES

JUDGEMENT

(1.) THIS judgment shall govern the disposal of M.C.C. No. 369 of 1978 also. The assessee, M/s. Project Automobiles, Bhilai, is common to both these cases. In M.C.C. No. 142 of 1976, the following question has at the instance of the Commissioner of Income -tax been referred to this court for its opinion by the Income -tax Appellate Tribunal: 'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that a sum of Rs. 2,235 was attributable to revenue expenditure ?'

(2.) THIS case is in respect of the assessment years 1970 -71, 1971 -72 and 1972 -73. The aforesaid question is common with regard to all the three assessment years aforesaid with the exception that the amount involved in the assessment years 1970 -71 and 1971 -72 is Rs. 2,235 whereas the amount is Rs. 2,084 in the assessment year 1972 -73.

(3.) AT this place, it may be mentioned that the same plea had been raised by the assessee in the assessment years 1964 -65 to 1969 -70 also with regard to the instalment of premiums paid in those years. The Income -tax Officer repelled the contention of the assessee and took the view that the payments made by the assessee towards premium represented capital expenditure and not revenue expenditure. On appeal, the Appellate Assistant Commissioner agreed with the view of the Income -tax Officer and sustained the disallowance of expenditure. The matter being taken up before the Tribunal, difference of opinion arose between the judicial member and the accountant member. Whereas the judicial member was of the view that the amount of premium represented payment of advance rent and the expenditure was, therefore, of a revenue nature, the accountant member was of the view that the payment of the premium was by way of price for securing a right of an enduring nature over the plot aforesaid and, consequently, the expenditure was of a capital nature. In view of the difference of opinion between the two members, the matter was referred to a third member who agreed with the view of the judicial member. Thereafter, on an application being made by the Commissioner of Income -tax, a question as to whether the stipulated payment of premium or any part thereof was of a revenue nature was referred to the High Court. This reference with regard to the assessment years 1964 -65 to 1969 -70 was pending in the Bombay High Court and we have not been informed about the ultimate decision in the aforesaid reference.