COMMISSIONER OF INCOME TAX Vs. SUNIL SYNCHEM LTD

JUDGEMENT

(1.) WE have heard learned counsel for the parties.

(2.) THIS reference application under S. 256(2) of the IT Act (for short 'the Act') at the instance of the Revenue is with respect to the asst. yr. 1977-78, seeking reference on a question of law from the order of the Tribunal dt. 28th July, 1988. It appears that the respondent-assessee sought capitalisation of pre-operative expense of Rs, 10,99,538. The ITO allowed the claim for a sum of Rs. 4,31,417 and disallowed for a sum of Rs. 6,68,120. In the opinion of the CIT(A), the assessee was entitled to depreciation of pre-operative expense, i.e., before the commencement of production. Accordingly he allowed the claim. The order of the CIT(A) was upheld by the Tribunal.