Commissioner of Income Tax vs Ramnord Research Laboratories P. Ltd.

J.P. Devadhar, J.—In this cross-reference the Income Tax Appellate Tribunal has forwarded two questions of law raised by the Revenue and one question of law raised by the assessee for the opinion of this court. The said questions relating to the assessment years 1978-79 and 1979-80 reads as under:

Questions at the instance of the Revenue:

(1) Whether, on the facts and in the circumstances of the case, the value of the stock of unsold raw films with the assessee is not assessable as the income of the assessee either on the ground that the assessee had not received the permission to sell them or on the ground that the assessee could value them at cost, in accordance with its past practice, which was admittedly ''nil''?

(2) Whether, on the facts and in the circumstances of the case, the limits laid down in Section 40(c) or those laid down in Section 40A(5) are applicable in case of directors who are employed?

Question at the instance of the assessee:

Whether the Tribunal was not right in sustaining the addition of Rs. 1,60,000 in the assessment for 1978-79; Rs. 1,40,000 in the assessment for 1979-80 as income derived from extraction of silver from hypo solution after processing the film by making an estimate under the proviso to Section 145 of the Income Tax Act, on the facts and in the circumstances of the case?

As regards the two questions forwarded at the instance of the Revenue, Mr. Sahadevan, learned Counsel appearing on behalf of the Revenue submits that he is not pressing the said two questions in view of the fact that the tax effect in both the questions for both the years is less than Rs. 4 lakhs. Accordingly, the two questions referred at the instance of the Revenue are returned unanswered.

As regards the question forwarded at the instance of the assessee is concerned, counsel on both sides agree that the issue before the Tribunal was whether, on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) was justified in holding that the proviso to Section 145 of the Income Tax Act, 1961, was applicable or not. Though the Tribunal has forwarded a statement of the case to that effect, on perusal of the order passed by the Tribunal it is seen that there is no specific finding recorded to that effect. In this view of the matter, counsel on both the sides agree that in the light of the judgment of the apex court in the case of Salem Co-operative Central Bank Limited Vs. Commissioner of Income Tax, , the order of the Tribunal be set aside and the matter be remanded back to the Tribunal for de novo consideration.

Accordingly, the reference is returned unanswered by setting aside the order of the Tribunal ; dated September 29, 1984, and remanding the matter back to the Tribunal for consideration on the issue raised before it in accordance with law.

Reference is disposed of accordingly. However, there will be no order as to costs.