COMMISSIONER OF INCOME TAX vs MAFATLAL FINE SPG. and MFG. CO. LTD.

U. T. SHAH, J. :

Under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following questions at the instance of the Revenue.

(1) "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cash payment such as rent and conveyance allowance were not to be treated as perquisites for the purpose of disallowance under s. 40(c)(iii)/40(a)(v) of the IT Act, for 1968-69 to 1971-72 assessment years ?"

(2) "Whether, on the facts and in the circumstances of the case and having regard to the provisions of s. 43A(2) of the Act, the Tribunal was justified in holding that the development rebates should be allowed on the actual (increased) cost which it paid for acquiring the machinery installed by it after the devaluation dt. 6th June, 1966 and not on the original lower cost, which was agreed to be payable prior to the date of devaluation, for 1968-69 assessment year ?"

At the time of hearing counsel for both the parties were fair enough to state that the issues involved in the aforesaid question are covered by the decision in the case of Commissioner of Income Tax, Bombay City-II Vs. Indokem Private Ltd., and in the case of Commissioner of Income Tax, Gujarat Vs. Arvind Mills Ltd., respectively.

Following the decision in the case of CIT vs. Indokem Pvt. Ltd. (supra), we answer the question No. 1 in affirmative and in favour of the assessee.

As regards the issue raised in question No. 2 is concerned, the learned counsel for the assessee submitted that perhaps the facts and circumstances pertaining in the case of his assessee may be little big different than the one considered by the Supreme Court in the case of CIT vs. Arvind Mills Ltd. (supra). In this connection, he has stated that the assessee has purchased the plant and machinery prior to 6th June, 1966 but had installed them after that date i.e., after the date of devaluation.

The learned counsel for the Revenue on the other hand submitted that this fact by itself would not in any way justify the non-applicability of the ratio laid down in the case of CIT vs. Arvind Mills Ltd. (supra).

On due consideration of the rival submissions of the parties and after carefully going through the aforesaid decisions of the Supreme Court, we are inclined to agree with the stand taken on behalf of the Revenue. Respectfully following the said decision of the Supreme Court, we answer question No. 2 in the negative and against the assessee.

No order as to costs.