Jain Tube Co. Ltd. vs Commissioner of Income Tax

Arijit Pasayat, C.J.—On being moved for reference, the Income Tax Appellate Tribunal, Delhi Bench-C (the "Tribunal" in short), has referred, at the instance of the assessed, the following questions u/s 256(1) of the Income Tax Act, 1961 (in short "the Act"), for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the difference in exchange amounting to Rs. 2,75,533 resulted in capital expenditure u/s 43A of the Income Tax Act, 1961, and/or is not an allowable revenue expenditure u/s 28 read with Section 37 of the Act? 2. Whether, on the facts and in the circumstances of the case, the receipt in respect of the sale of import entitlements amounting to Rs. 7,38,634 constitutes the business income of the assessed assessable under the Income Tax Act, 1961 ?"

The factual aspects need not be gone into as the issue involved in the first question stands settled by a decision of the apex court in Sutlej Cotton Mills Limited Vs. Commissioner of Income Tax, Calcutta, . Following the view expressed in the said decision, we answer the question in the affirmative, in favor of the Revenue and against the assessed. So far as the second question is concerned, though the Tribunal referred to various decisions, it is not necessary to go into that in view of the provision contained in Section 28(iiia) of the Act, which was made operative with effect from April 1, 1962. The question is answered in the affirmative, in favor of the Revenue and against the assessed.

3.The reference stands disposed of.