Commissioner of Income Tax vs Okay Transport Corporation

Sujata V. Manohar, C.J.—The Department has filed these petitions u/s 256(2) of the Income Tax Act, 1961, and has sought a direction that we should ask the Tribunal to refer the following questions of law to us for determination :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding :

(a) ''the Commissioner of Income Tax (Appeals) is not justified in holding that the assessee is liable to be taxed on the accrued interest'',

(b) ''the assessee is entitled to employ the hybrid system of accounting for the above transactions and are not the above findings wrong, unsupported by materials, based on surmises and conjuctures ?

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in deleting the addition made ?

(3) Whether, on the facts and in the circumstances of the case and in the light of the finding of fact by the Commissioner of Income Tax (Appeals) that the assessee was adopting accrual system of accounting and in the absence of a contrary finding of fact by the Tribunal, the Tribunal is right in law and fact in deleting the addition confirmed by the Commissioner of Income Tax (Appeals) ?

(4) Whether, on the facts and in the circumstances of the case and especially after having found that the assessee ''is a registered firm engaged in the business of transporting of goods by lorries on hire'',--

(i) ''the transaction giving rise to the dispute can be viewed as separate and special type of transaction ; distinct and different from the other transactions of the assessee'' and are not findings of ''separate and special type'' ; ''distinct and different'' ; ''from the other transactions of the assessee'' against facts, wrong and based on surmises ?"

The Tribunal has, in its order dated February 2, 1993, considered at length the accounts of the assessee for the relevant assessment years 1985-86 to 1988-89. It has come to the conclusion that the assessee''s business was transporting goods, and the assessee was following the mercantile system of accounting as far as its business of transportation of goods was concerned, but in respect of the transaction for which the pronotes in question were issued, the transaction was of a special character distinct and different from other transactions of the assessee. The Tribunal has set out at length the reasons why this transaction has been considered by it as a separate and special type of transaction and has come to the conclusion that the assessee is entitled to employ a hybrid system of accounting in respect of this transaction. These are findings of fact and no question of law therefore arises, which requires to be referred to us for determination. Hence, the original petitions are dismissed.