Commissioner of Income Tax vs Chhagan Lal Kishan Lal and Co.

A.M. Sapre, J.—This is an application made u/s 256(2) of the income tax Act by the Revenue (Commissioner of income tax) consequent upon the dismissal of their application made u/s 256(1) of the Act by the Tribunal by their order dated 25-9-1998, passed in R.A. No. 94/IND./98 which in turn arise out of an order dated 23-3-1996, passed by Tribunal in ITA No. 420/IND./94. By this application, the revenue prays for calling the statement of case from the Tribunal for answering the question proposed by the revenue u/s 256(1) of the Act. Heard Shri R.L. Jain, learned counsel for the applicant and Shri G.M. Chafekar, learned senior counsel with Shri D.S. Kale, learned counsel for the respondent.

Having heard learned counsel for the parties and having perused record of the case, we are of the view that a question of law does arise out of the Tribunal''s order, dated 23-3-1996 passed in ITA No. 420/IND./94 and hence, the Tribunal should have referred the question proposed by the revenue to this Court by taking recourse to the provisions of section 256(1) of the Act. In other words, on going through the controversy raised by the parties in the appeal, we do feel and are rather satisfied that the question proposed cannot be said to be a question of fact as wrongly held by the Tribunal while dismissing the application of revenue but it is a question of law requiring this court to answer the same on merits. Since, we are satisfied that question of law arises out of an order dated 23-3-1996 and hence, we do not wish to burden our order by narrating the entire facts in detail. It will be now for the Tribunal to prepare the statement of case and then send the same to this court alongwith the question of law framed by this Court for answer.

Suffice it to say, the dispute relates to assessment year 1992-93. The question involved relates to interpretation of section 80-I as it then stood and having its application to the facts of case of assessee. We propose following question of law for answer on merits which in our opinion arise out of an order dated 23-3-1996 passed by Tribunal in ITA No. 420/IND./94 :--

Whether on the facts and in the circumstances of the case, Tribunal was justified in upholding the decision of CIT(A) and directing the Assessing Officer to allow the deduction u/s 80-II of the Act on the profits and gains derived from the sale of cotton processed in its own unit as well as to the cotton that was processed from the outside, though as per amended provisions of section 80-I w.e.f. 1-4-1981 only the income derived from such undertaking was to be considered for the allowance of deduction under the said section?

Let the statement of case be drawn on facts applicable to the case for the assessment year 1992-93 by the Tribunal and the same be sent to this court within three months. Let record of this case be sent back to Tribunal by Registry of requisitioned to enable them to ensure compliance of the order. In view of aforesaid discussion, the application is allowed.

No costs.