COMMISSIONER OF INCOME-TAX Vs. NUCHEM PLASTICS LTD

JUDGEMENT

(1.) This is an application under s. 256(2) of the IT Act, 1961, by the CIT, Haryana, seeking a direction to the Tribunal, Delhi to refer the following question of law to this High Court for opinion :

(2.) The assessee-company manufactured synthetic and plastic goods. It showed a loss of Rs. 54,97,370 in its return. A revised return was, however, filed showing a loss of Rs. 45,40,850. The accounting year in respect of the asst. yr. 1982-83 ended on 30th September, 1981. The AO, during the course of assessment proceedings, noticed that an amount of Rs. 85,50,443 had been shown by the assessee in the balance sheet as the excise-duty liability. This amount had not been paid till 30th September, 1981 though deduction had been claimed. An amount of Rs. 3,37,706 also stood in the balance sheet as a liability on account of the amount of sales-tax payable by the assessee. This amount had been collected as part of the sale proceeds but had not been paid till the last date of the accounting year. The AO disallowed the claim of deduction in respect of excise duty on the ground that the liability had not been discharged by the assessee. Similarly, the amount of sales-tax collected as part of the sale proceeds, was treated as trading receipt and, since the amount had not been paid up to the last date of the accounting year, its deduction was not allowed.

(3.) Shri R. P. Sawhney, learned senior counsel for the Department, has argued that a question of law does arise from the Tribunals order, because the additions made by the AO were deleted by the CIT(A) and that appellate order was upheld by the Tribunal. Reliance is placed on a decision of the Supreme Court in CIT V/s. Managing Trustee, Jalakhabai Trust, 1967 66 ITR 619 (SC), for the proposition that the High Court has only to consider whether a question of law, which may be supported by reasonable argument, arises out of the order of the Tribunal. It is contended that the amounts of excise duty as well as sales-tax, collected by the assessee, did constitute part of the revenue receipts and, therefore, should have been shown in the P&L a/c. Since neither of the two liabilities had been discharged, deduction could not be claimed for either of them. Therefore, a question of law is said to arise.