Commissioner of Income Tax vs National Rayon Commercial Co. Ltd.

This is an application u/s 256(2) of the Income Tax Act, 1961, asking us to issue a direction to the Income Tax Appellate Tribunal to refer to us certain questions which are set out in the application. Rule, however, has been issued only in respect of question No. 1 in R. A. No. 2611/( Bom) of 1984. This question is as follows :

"Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that tyre-cord manufactured by the assessee was an ''automobile ancillary'' and whether the assessee is entitled to higher rate of development rebate u/s 33(1)(b)(B)(i) ?"

The present question relates to the assessment year 1976-77. For the earlier assessment years 1973-74, 1974-75 and 1975-76, a similar question was sought to be raised by the Department in respect of the same assessee in Income Tax Application No. 86 of 1983 CIT v. National Rayon Corporation Ltd. [1992] 193 ITR 744 . A Division Bench of this court to which one of us was a party (Kania J. and myself), by its order dated February 7, 1984, discharged the rule in respect of this question on the ground that the Tribunal had, on the evidence before it, taken a view that, in a commercial sense, the tyre-cord manufactured by the assessee must be regarded as an automobile ancillary and that it could not be said that the Tribunal''s conclusion was without evidence or was perverse. The court had also relied upon a decision of the Supreme Court in the case of Commissioner of Income Tax, Bombay Vs. Nirlon Synthetics Fibres and Chemicals Ltd., . For the same reasons, we also feel that no purpose will be served in these circumstances by making the rule absolute.

In the premises, the rule is discharged with no order as to costs.