1998 (10) TMI 20 - HC - Income Tax

Reference Valuation Of Stock Business Expenditure Capital Gains Previous Year Advance Tax

Summary

Issues:
1. Assessment year 1985-86: Transfer of shares, excise duty deduction, interest under section 217(1A), jeep classification, unrealized interest from Government securities.
2. Assessment year 1984-85: Transfer of shares, different previous year for share income, excise duty deduction, closing stock valuation, capital loss transfer, interest under section 217(1A).

Assessment Year 1985-86:
- The assessee sought reference on various issues including the transfer of shares of a subsidiary to its wholly owned subsidiary, excise duty deduction on closing stock, and the leviability of interest under section 217(1A). The court held that the change in accounting year by the assessee affected the assessment year, and the claim for separate accounting years for different sources of income was rejected. The court found no merit in the questions related to a jeep being classified as a motor car and the inclusion of unrealized interest from Government securities as income. These questions were dismissed as they lacked substance and merit.

Assessment Year 1984-85:
- The issues raised for this assessment year included the transfer of shares, different previous year for share income, excise duty deduction, closing stock valuation, capital loss transfer, and interest under section 217(1A). The court found that the excise duty paid by the assessee should not be included while valuing the closing stock, and directed the Tribunal to refer this question. However, questions regarding the valuation of closing stock and the right to carry forward capital loss were dismissed as they were considered factual issues and not referable. The court directed the Tribunal to refer only the excise duty deduction question for this assessment year.

Conclusion:
- The court rejected most of the questions proposed by the assessee for both assessment years, except for the excise duty deduction issue in each year. The court directed the Tribunal to refer these specific questions for further consideration. The assessee was ordered to pay costs to the Revenue due to the time spent on non-referable questions.