Khatau Makanji Spinning and Weaving Co. Ltd. vs Commissioner of Income Tax

B.P. Saraf, J.—By this reference u/s 256(1) of the Income Tax Act, 1961, following three questions have been referred by the Tribunal at the instance of the assessee to this court for opinion :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in refusing to admit the additional ground, namely, whether the remuneration paid to the directors was covered by Section 37 of the Income Tax Act and not by the provisions of Section 40(c), in view of the fact, the Income Tax Officer had not given the requisite finding u/s 40(c) of the Income Tax Act ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that ''remuneration'' included commission for the purposes of the application of Section 40(c) of the Income Tax Act ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was not eligible for investment allowance u/s 32A of the Income Tax Act in respect of the additional cost of imported assets of Rs. 2,21,833 ?"

Learned counsel for the parties are agreed that the first question is covered by the Full Bench decision of this court in the case of Ahmedabad Electricity Co. Ltd. And Godavari Sugar Mills Ltd. Vs. Commissioner of Income Tax, . Following the same, we answer this question in the negative and in favour of the assessee.

Learned counsel for the parties are also agreed that the second question is covered by the decision of this court in the case of Godavari Sugar Mills Ltd. Vs. Commissioner of Income Tax, . Following the same, we answer the second question in the affirmative and in favour of the Revenue.

So far as the third question is concerned, learned counsel for the assessee submits that this question is not covered and the assessee is entitled to investment allowance u/s 32A in respect of additional costs of the imported assets which has taken place because of the fluctuation in the rate of exchange in the year subsequent to the year of acquisition.

We have heard learned counsel for the assessee. We have perused Section 32A. We do not find anything there which may support the above contention of learned counsel for the assessee. We, therefore, answer the third question in the affirmative, i.e., in favour of the Revenue and against the assessee.

No order as to costs.