Commissioner of Income Tax vs K. Subbaraju and Venkateswara Rao and Co.

Y.V. Anjaneyulu, J.—The following four questions are referred by the Income Tax Appellate Tribunal for the consideration of this court u/s 256(1) of the Income Tax Act, 1961 :

"(1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that the value of the stock written off by the assessee was an allowable deduction ?

(2) If the answer to the question No. (1) is in the affirmative, whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the value of the stock was allowable for the assessment year 1975-76 ?

(3) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the contribution made to the welfare fund was deductible u/s 37(1) ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the interest due by the partners to the firm should be set off against the interest paid/payable to the partners by the firm for arriving at the amount to be disallowed u/s 40(b) of the Income Tax Act, 1961 ?"

The matter relates to the assessment year 1975-76. The respondent-assesee is not represented. Learned standing counsel for the Revenue has drawn our attention to each one of the questions and pointed out that the questions are covered by earlier decisions. We have considered the decisions brought to our notice by learned standing counsel and were satisfied that the questions are fully covered one way or the other as we shall presently indicate.

Question No. (1) is covered by the principle upheld by this court in Sri Satyanarayana Rice Mill Vs. Commissioner of Income Tax, . There is little doubt in the facts and circumstances of this case that the assessee was violating the law when it transported rice to Kerala in the guise of broken rice. Because of the violation of law, the confiscation was properly made. We accordingly answer the first question referred to us in the negative, that is to say, in favour of the Revenue and against the assessee.

In view of our answer to question to question No. (1), question No. (2) does not arise.

As regards question No. (3), it is covered in favour of the Revenue by the decision of this court in Commissioner of Income Tax, Andhra Pradesh Vs. Kodandarama and Company, Bhupathiraju Gopal Krishanraju, C. Surayanrao and Company and Venkata Satyanarayana, .

Finally, question No. (4) is covered against the Revenue and in favour of the assessee by the decision of this court in Commissioner of Income Tax Vs. T.V. Ramanaiah and Sons, .

We, accordingly, answer the four questions referred to us. There shall be no order as to costs.