Calcutta H.C : Whether, on the facts and in the circumstances of the case and on a proper construction of the relevant deed of lease, the Tribunal was right in holding that the income of the assessee from lease of its jute mill was assessable under s. 28 of the IT Act, 1961, and not under s. 56 thereof ?

Counsel Appeared

Bagchi & B.K. Naha, for the Revenue

C. SEN, J. :

The following questions of law have been referred to this Court by the Tribunal under s. 256(1) of the IT Act, 1961 (“the Act”) :

“1. Whether, on the facts and in the circumstances of the case and on a proper construction of the relevant deed of lease, the Tribunal was right in holding that the income of the assessee from lease of its jute mill was assessable under s. 28 of the IT Act, 1961, and not under s. 56 thereof ?

2. Whether, on the facts and in the circumstances of case, the sum of Rs. 15,000 paid to an ex-employee is an admissible deduction in the computation of the assessee’s income from the leasing out of the assessee’s jute mill ?”

The assessment year involved in this reference is the asst. yr. 1963-64, for which the relevant accounting period ended on April 14, 1963. Question No. 1 in this reference came up for consideration before this Court in the case of the same assessee, CIT vs. Prem Chand Jute Mills Ltd. (1978) 114 ITR 769 (Cal), in respect of the asst. yr. 1962-63. In view of that judgment, question No. 1 must be answered in the affirmative and in favour of the assessee.

On question No. 2, the dispute is whether the sum of Rs. 15,000 paid to the ex-employee should be allowed as deduction in the computation of the assessee’s income. The AAC, in his order, directed the ITO to re-examine the claim of Rs. 15,000 and if the date on which the liability was ascertained fell within the accounting year ended on April 14, 1963, the ITO was directed to allow the expenses in the assessment for the assessment year under consideration.

Since the income is to be assessed under s. 28 of the Act, this expense has to be allowed. The Tribunal has rightly pointed out that if the relevant date on which the liability was ascertained fell within the accounting period ended on April 14, 1963, this would have to be allowed.

In the circumstances, question No. 2 is also to be answered in the affirmative.

Accordingly, both the questions are answered in the affirmative and in favour of the assessee. There will be no order as to costs.

BHAGABATI PRASAD BANERJEE, J.:

I agree.

[Citation :180 ITR 238]