TMI Blog1987 (11) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case, it is legal and proper to reduce the rebate of super-tax at 7.5% on the whole of the amount of the dividend other than the dividend on preference shares having regard to the relevant provisions of the Finance Acts, 1964 and 1965, as the case may be ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in disallowing the whole or a part, as the case may be, of the salary paid by the assessee to Smt. Taramani Mandelia, Smt. Damayanti Buch and Smt. Perry in the assessment years 1964-65 and 1965-66 ? (3) Whether, on the facts and in the circumstances of the case, the litigation expenses of Rs. 90,204 and Rs. 86,188 incurred by the assessee in the assessment years 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity shares of Rs. 62-5 lakhs. The dividend was declared out of the General Reserve Fund. While framing the assessment for the aforesaid assessment years, the Income-tax Officer withdrew the rebate on this dividend at the rate of 7.5% in accordance with the provisions of the second proviso to the relevant paragraph of Part II/Part I of the First Schedule to the relevant Finance Act. The Income-tax Officer disallowed salary paid to Smt. Mandelia, Smt. Buch and Smt. Perry and further disallowed deduction for expenditure incurred by the assessee in connection with certain arbitration proceedings on the ground that it was not revenue expenditure. The Income-tax Officer also rejected the claim of the assessee that the amount of rebate allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly taxed was not part of the total income of the previous year ; that the provisions of the Finance Acts, 1964 and 1965, providing for reduction of rebate were outside the scope of the Finance Acts, and that they were discriminatory and penal in nature. Now, as regards the challenge to the validity of the relevant provisions of the Finance Acts, it would not be permissible for us to go into that question in a reference to this court under section 256 of the Act. Of course, the question as to whether the tax, in the instant case, has been-legally charged under the relevant provisions of the Finance Acts can certainly be examined by this court and it is, therefore, necessary to turn to that aspect of the matter. Now, in the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Income-tax Officer in this behalf. Our answer to question No. (1) is, therefore, in the affirmative and against the assessee. Questions Nos. (2) and (3): These questions were not pressed by learned counsel for the assessee and hence it is not necessary to answer these questions. We, therefore, decline to answer these questions. Questions Nos. (4) and (5): A similar question came up for consideration before a Division Bench of this court in Gwalior Rayon, Silk Manufacturing (Weaving) Co. Ltd. v. CIT [1983] 143 ITR 590. It was held in that case that the amounts received by an assessee as drawback of customs duty and as refund of excise duty were received only because of the export business carried on by it and that these amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the old looms would be discarded. The assessee purchased 155 new looms for a sum of Rs. 11,09,794. After adjusting the scrap value of the old looms, the expenditure incurred by the assessee in connection with the purchase of old looms was Rs. 3,20,477. The contention of the assessee before the Tribunal was that the actual cost of the new looms should be taken to be Rs. 14,34,272, inclusive of the sum of Rs. 3,20,477 for the purpose of allowing depreciation and development rebate. The Tribunal did not uphold the contention of the assessee on the ground that neither commercial practice nor any provision of law justified increasing the cost of newly acquired asset by the cost of value of an asset which was replaced by the new asset. In our op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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