Delhi H.C : Whether, on the facts and in the circumstances of the case and on the interpretation of the provisions of sub-s. (3) of s. 33 of the Act, the Tribunal was justified to hold that the assesseecompany is entitled to the carry forward of development rebate, having remained outstanding in the hands of HEIL which amalgamated with the assessee-company w.e.f. 1st Jan., 1974 ?

High Court Of Delhi

CIT vs. Bharat Heavy Electricals Ltd.

Sections 33, 34(3)(a), 37(2)

Asst. Year 1974-75

Arijit Pasayat, C.J. & D.K. Jain, J.

IT Ref. No. 186 of 1983

10th August, 2001

Counsel Appeared

R.C. Pandey with Ajay Jha & Ms. Prem Lata Bansal, for the Petitioner : None, for the Respondent

JUDGMENT

ARIJIT PASAYAT, C.J.:

Following questions have been referred for opinion of this Court under s. 256(1) of the IT Act, 1961 (in short ‘the Act’), by the Income-tax Appellate Tribunal, Delhi Bench-C (‘Tribunal’ in short) :

“1. Whether, on the facts and in the circumstances of the case and on the interpretation of the provisions of sub-s. (3) of s. 33 of the Act, the Tribunal was justified to hold that the assesseecompany is entitled to the carry forward of development rebate, having remained outstanding in the hands of HEIL which amalgamated with the assessee-company w.e.f. 1st Jan., 1974 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the expenditure of Rs. 19,429 incurred by the assessee on serving tea, coffee and light refreshments to the representatives of the customers was not in the nature of entertainment and was allowable as a business expenditure ?”

Dispute relates to the asst. yr. 1974-75.

2. Factual aspects need not be noted in detail in view of the fact that while deciding the issue involved in the first question, the Tribunal had placed reliance on a decision of the Allahabad High Court in Addl. CIT vs. Vishnu Industrial Enterprises (1979) 9 CTR (All) 46 : (1980) 122 ITR 919 (All) : TC 28R.529. The view expressed in the said case was specifically overruled by the Supreme Court in Shri Shubhlaxmi Mills Ltd vs. Addl. CIT (1989) 77 CTR (SC) 33 : (1989) 177 ITR 193 (SC) : TC 28R.594. Consequentially, we would have answered the question in favour of the Revenue but we find that s. 34(3)(a), as amended by the Finance Act, 1990, has some relevance to the issue, more particularly in view of the fact that expression ‘relevant previous year’ as stood prior to the amendment has been substituted by the words ‘any previous year…….’, to be operative with retrospective effect from 1st April, 1962. It would, therefore, be appropriate for the Tribunal to decide as to the effect of the said amendment and the relevance thereof to the dispute at hand. So far as the second question is concerned, it is squarely covered by the decision of the apex Court in CIT vs. Patel Bros. & Co. Ltd. & Ors. (1995) 126 CTR (SC) 132 : (1995) 215 ITR 165 (SC) : TC S17.1903. The second question is, therefore, answered in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.

[Citation : 254 ITR 447]

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