High Court Of Madhya Pradesh : Indore Bench
CIT vs. Chemifine
Sections 40A(3), 43B, 256(2)
A.M. Sapre & Ashok Kumar Tiwari, JJ.
MCC No. 62 of 1995
11th May, 2004
Counsel Appeared
R.L. Jain with Smt. S. Gupta, for the Applicant : S.C. Bagadia with D.K. Chhabra, for the Respondent
ORDER
A.M. Sapre, J. :
The decision rendered in this case shall also govern disposal of other connected cases being MCC Nos. 65, 66, 67,71, 72, 77, 78 and 88 of 1995, because all these cases arise between the same parties and secondly, seek to question the legality of one common order passed by the ITAT (Tribunal for short) the only difference being they arise out of different assessment years.
2. This is an application made by the Revenue (IT Department) under s. 256(2) of the IT Act praying for calling for the reference on the questions proposed in the application from the Tribunal to this Court for being answered by this Court under s. 256(1) of the Act. In all these cases, the Tribunal declined to make the reference to this Court and rejected the applications made by the Revenue under s. 256(1) of the IT Act holding that the questions proposed by the Revenue do not or cannot be regarded as questions of law for being referred to this Court for answer on merits. According to Tribunal, all the questions proposed were pure questions of fact and hence, were not capable of being referred to this Court. It is against this order of the Tribunal declining to refer the case to this Court; the Revenue has come up to this Court by making an application under s. 256 (2) of the Act. Heard Shri R.L. Jain, learned senior counsel with Smt. Sonali Gupta, learned counsel for the applicant and Shri S.C. Bagadia, learned senior counsel with Shri D.K. Chhabra, learned counsel for the non-applicant.
The questions proposed at the instance of Revenue arise in cases relating to asst. yrs. 1982-83, 1985-86 and 1986-87. These questions basically relate to certain additions/deletions made by the AO and later deleted by CIT(A) and finally upheld in favour of assessee by the Tribunal in second appeal filed by the parties (Revenue). Yet another question is in regard to giving benefit to the assessee under s. 43B and in relation to addition/deletion made under s. 40A(3) r/w r. 6DD(J) of the IT Rules.
Coming to the question of certain deletion allowed by CIT(A) in favour of assessee, the Tribunal while upholding these deletions held that they were properly given to assessee in the facts of the case. It was held that in the absence of any material, the ITO (AO) was not justified in making such additions and that explanation offered should have been accepted in support of the deletion. In fact, it was then accepted by the CIT(A) and Tribunal.
In our considered opinion, the Tribunal seemed justified while rejecting the application made by the Revenue under s. 256(1) of the Act when it held that it is a pure finding of fact involving no question of law as such, which can be referred to this Court for re-examination. We find no reason to differ with the view taken by the Tribunal on this issue because in our opinion also, the question proposed is essentially a question of fact and not a question of law.
The question, whether a particular addition or deletion as the case may be should be allowed or not in favour of assessee, is essentially a question of fact. It is only when a particular addition or deletion is claimed on the strength of some section under the IT Act and to name a few are, concerning standard deduction, depreciation, investment allowances, deductions under ss. 80 or 88 and like several others, then the question of law may arise as to whether such deduction was rightly claimed, or not and whether it can be allowable under a particular section. It is because of the reason that it requires applicability of section with reference to the claim of the assessee. At times, it may require the interpretation of section which if interpreted in assessee’s favour; may result in its benefit in favour of assessee. In any case, it is then a case involving pure question of law requiring the interpretation to be done by this Court in its reference jurisdiction conferred by s. 256(1) of the Act. However, when the assessee claims a deduction in his business income as a business expenditure on account of incurring a particular expenditure then such deduction needs a factual inquiry and consideration of explanation if offered by the assessee insofar as it relates to a particular deduction. It is then for the AO to examine as to whether an explanation offered by the assessee is to be accepted so as to give him/them the benefit of deletion from his gross income. The same inquiry can be repeated at the level of CIT(A) and lastly, to the extent permitted at the level of Tribunal with a view to find out whether deduction claimed by the assessee in his gross income can be allowed, or not? This inquiry being essentially factual in nature does not involve any question of law much less abstract question of law. It is only when one is able to notice that deduction claimed or granted is totally perverse, or on the face of it illegal which no judicial man can ever grant it, the question of law may emerge out of it requiring interference by the Court by calling the reference, if already declined by the Tribunal, or answer the reference, if already made.
Coming to the facts of the case, so far as issue relating to one particular type of deductions is concerned, the Tribunal held them to be falling in later category of cases which are taken note of supra, i.e. they were held to be issues of facts. As observed supra, since we also concur with the reasoning on perusing the order of Tribunal rendered in second appeal, we decline to call for any question from the Tribunal to be answered by this Court in our reference jurisdiction under s. 256 (1) of the Act.
9. Coming to the another type of deduction, the same was in relation to s. 43B ibid. Even for this deduction, the Tribunal has found as a fact that the collection of sales-tax made and paid on or before the due date of return of income or paid within the prescribed limit of sale-tax is an allowable one and in the facts of this case, it was done by the assessee. Indeed, this was the view of Supreme Court while interpreting the provisions of s. 43B of the Act in the case of Allied Motors vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677 (SC). In view of this categorical finding recorded by the Tribunal in second appeal, it was held that no referable question of law on this issue arises for being answered by this Court. We are in agreement with the view of the Tribunal on this issue also and decline to call for the reference. Indeed, when the deduction claimed is in accord with the view taken by the Supreme Court and categorical finding is also recorded in hierarchy of appellate jurisdiction by the Tribunals then there arise no case to again examine the issue in reference. Then comes a deduction falling under s. 40A(3) r/w r.6DD(J). In our opinion, even the deductions claimed under this Rule are pure question of fact and do not need examination by the High Court in its reference jurisdiction. The deduction under s. 40A(3) is available provided assessee is able to make out a case that he/they has/have satisfied the conditions specified in r. 6DD(J) ibid. Now, whether assessee has satisfied the conditions specified in r. 6DD(J), or not depends upon the facts of each case and further depends upon the explanation offered by the assessee. This exercise also does not involve any question of law as such, unless it is shown that finding on this issue is so perverse and/or illegal that no judicial man can ever reach. No such attempt was made at the instance of Revenue to bring the case on these lines.
In view of foregoing discussion, we are of the view that no referable question of law arises on the questions proposed by the Revenue on any of the claims made by the assessee as they are all based on questions of facts and must rest at the level of Tribunal. It is a well settled principle of law in relation to exercise of jurisdiction under s.256(2) of the Act that it is only when any referable question of law arises out of the order passed by the Tribunal while deciding the appeal, the same can be called for being answered. Since, in this case, we could not notice any question, the application must be dismissed.
As a result, the application made by the Revenue is dismissed. No costs.
[Citation : 270 ITR 305]
