COMMISSIONER OF INCOME TAX Vs. JAIN CONSTRUCTION COMPANY

JUDGEMENT

(1.) THIS is an application under Section 256 of the Income-tax Act, 1961, by the Commissioner of Income-tax requiring this court to direct the Tribunal to submit a statement of case and refer the following questions of law said to be arising out of the order passed by the Tribunal in Income-tax Reference Application No. 894 (JP) of 1996 relating to the assessment year 1993-94. Inasmuch as, in our opinion, the aforesaid questions have become of academic importance and the Tribunal was justified in refusing to grant application for making such reference under Section 256(1) of the Act of 1961.

(2.) THE Income-tax Officer in the first instance by order dated January 31, 1999, has assessed the income of the assessee by applying net profit rate with specific stipulation that this is subject to depreciation, interest paid to third parties, and remuneration paid to partners. THE net profit rate applied subject to expense on these three accounts to be adjusted was 12.5 per cent. From the amount so determined the interest paid, depreciation and remuneration to partners were deducted for the purpose of arriving at a net taxable income. Aggrieved by the order the assessee has appealed before the Deputy Commissioner (Appeals). While the assessee's appeal was pending, the Commissioner of Income-tax, considering the order of the Income-tax Officer to be prejudicial to the interests of the Revenue acted under Section 263 of the Act and revised the assessment by excluding the deductions made on account of interest, depreciation and remuneration to partners. Against the order of the Commissioner under Section 263, the assessee preferred an appeal before the Income-tax Appellate Tribunal. THE said appeal of the assessee was allowed by the Tribunal by holding that in the aforesaid circumstances after applying the net profit rate the deductions were permissible. Against the order of the Tribunal allowing the appeal of the assessee in respect of the order under Section 263 passed by the Commissioner, the Revenue filed an appeal under Section 256(1) for making a reference of the aforesaid questions of law said to be arising out of its order. That application was rejected by the Tribunal holding that no question of law arises. THEreafter the Revenue filed an application under Section 256(2), D. B. Income-tax Reference Case No. 12 of 1998 before this court for raising the same questions as are sought to be raised in the present case.