Periakaramalai Tea and Produce Co. Ltd. vs Commissioner of Income Tax

K.S. Paripoornan, J.—This batch of four original petitions is filed by the same assessee to Income Tax. The petitions are filed u/s 256(2) of the Income Tax Act, 1961 (in short, "the Act"), praying for a direction that the questions/question formulated in paragraph 4 of the original petitions may be directed to be referred to this court by the Income Tax Appellate Tribunal (in short, "the Tribunal"). In Original Petition No. 9262 of 1989, two questions have been formulated, whereas, in the other three original petitions, only one question is formulated. The second question in Original Petition No. 9262 of 1989 and the sole question in the other original petitions are the same. Therefore, it is sufficient to extract the two questions formulated in paragraph 4 of the Original Petition No. 9262 of 1989. They are as follows :

" (i) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in confirming the order of the Commissioner of Income Tax (Appeals) holding that the entire expenditure incurred on the maintenance of bungalows and one-third of the expenditure incurred on the maintenance of motor cars were includible in the computation of disallowance u/s 40A(5) ?

(ii) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the liability to surtax was not deductible in the computation of income?"

We heard counsel. The only aspect that arises for consideration is whether there is any referable question of law that has been posed by the petitioner. The first question formulated in Original Petition No. 9262 of 1989 is covered by a Full Bench decision of this court in Commissioner of Income Tax Vs. Forbes, Ewart and Figgis (P.) Ltd. and Harrison and Crossfield Ltd., . In so far as the matter is covered by a Full Bench decision of this court, we do not think that any referable question of law arises. Subsequent to the decision of the Full Bench of this court, there is no decision of the Supreme Court on that aspect. The decision by the Full Bench of this court is binding on us. So we hold that question No. 1 in Original Petition No. 9262 of 1989 is not a referable question of law.

The second question in Original Petition No. 9262 of 1989 and the sole question in the other three cases is covered by a Full Bench decision of this court in A.V. Thomas and Co. Ltd. Vs. Commissioner of Income Tax, . The Full Bench has taken the view that surtax is a charge on income and is a levy on the profits and gains of the business. It is not an expenditure laid out or expended for purposes of business and so not an allowable deduction u/s 37 or Section 40(a)(ii) of the Income tax Act, 1961. In view of the above Full Bench decision of this court in A.V. Thomas and Co. Ltd. Vs. Commissioner of Income Tax, , we are of the view that question No. (ii) in Original Petition No. 9262 of 1989 and the sole question in the other three original petitions cannot be said to be a referable question of law. In all the cases, the questions/question posed for consideration are covered by the Full Bench decisions of this court-- Commissioner of Income Tax Vs. Forbes, Ewart and Figgis (P.) Ltd. and Harrison and Crossfield Ltd., and A.V. Thomas and Co. Ltd. Vs. Commissioner of Income Tax, , against the assessee. So they are not referable questions of law. The answers to the questions, formulated in the original petitions, are self-evident, in view of the Full Bench decisions aforesaid. Therefore, we hold that there is no merit in these original petitions. They are dismissed.