M/s. Premier Proteins Ltd. vs Commissioner of Income Tax

A:M. Sapre, J.—This is an application made by the assessee u/s 256(2) of the Income Tax Act consequent upon the dismissal of their application made u/s 256(l) of the Act by the Tribunal in R.A. No. 114 and 115/Ind/98 which in turn arise out of the order passed by the Tribunal dated 14-05-1998 in ITA No. 514/lnd/92 and 924/Ind/94 relating to assessment year 1988-89 and 89-90.

According to assessee, the Tribunal was not right in dismissing the application made by the assessee u/s 256(l) of the Act for making the reference to this court on the questions proposed and hence, need to make this application u/s 256(2) of the Act before this Court.

Heard Ku. V. Kasrekar learned counsel for the assessee and Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the revenue.

Having heard learned counsel for the parties and having perused record of the case, we too are of the view that application does not involve any referable question of law in this court for being answered on merits u/s 256(l) of the Act and hence, this application in liable to be dismissed.

The applicant has proposed following four questions for being referred to this court for answer:-

Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the service charges of Rs. 9,24,257 paid by the applicant company to its holding company was not to the same company to whom such service charges have been agreed to be paid without appreciating that only the name of the holding company had been changed and not its identity?

2-Whether on the facts and in the circumstances of the case, when section 40A(2) only provides for disallowance of expenses incurred which are excessive or unreasonable, the entire service charges paid by the appellant company to its holding company for services rendered by it would be disallowed by the Tribunal by invoking section 40(A)(2)?

Whether on the facts and in the circumstances of the case, the Tribunal was justified in invoking the provisions of section 40(A)(2) In the- present case when both the companies concerned were public limited companies?

Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that entire service charges paid were unreasonable and excessive considering the services rendered by the holding company?,"

In our opinion, all the essentially questions of fact involving no question of law as such. In fact, all the four questions are interlinked together and based on appreciation of facts brought on record rather than involving any issue of law which is referable to this Court. In order that the question is referable and involving any issue of law, it must be a question involving interpretation of some section, rule etc. If the question proposed only involves some appreciation of facts, then no referable question can be said to arise out of the case. The same appears to be a case of that nature so far as this case is concerned.

The question, whether a particular charge paid as service charge can be deducted or not when it is paid to the same company? is essentially a question of fact. It was decided on the basis of agreements and documents filed by the assessee in support of their case. This issue was good for debate upto Tribunal but not thereafter for High Court in reference jurisdiction u/s 256(l) of the Act.

In our opinion thus, the Tribunal was right in holding that questions proposed by the applicant i.e. Assessee do not partake the nature of legal questions but they are essentially based on facts. While thus agreeing with the view taken by the Tribunal, the application is found to be devoid of merit. It is dismissed.

No costs.