TMI Blog1990 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) who held that the assessee was entitled to investment allowance on the diesel generator and transformer?" The respondent/assessee is a private limited company having the business of catching and purchasing fish, processing them and exporting them. We are concerned with the assessment year 1977-78, for which the accounting period ended on February 28, 1977. During the assessment year, the assessee debited a sum of Rs. 12,01,787 as provision for purchase tax and surcharge. Out of this, a sum of Rs. 2,86,436 admittedly related to purchase tax and surcharge on cashew kernels in which the assessee was dealing and related to the assessment year 1975-76. The assessee made the claim for allowance of this amount even for the assessment year 1975-76. The claim was rejected. That prompted the assessee to renew the claim in the assessment year 1977-78. It was so done on the ground that the Income-tax Officer agreed to allow this amount in the year in which the payment was obligatory. But, when the plea was put forward in the succeeding assessment year 1977-78, the Income-tax Officer relied on the decision of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal held, on a review of the entire facts, that the assessee is entitled to the relief under section 80J of the Income-tax Act as the producer of goods or articles and as one who operates one or more cold storage plant or plants. The Appellate Tribunal relied on the expression " processed " in items (28) and (30) of the Fifth Schedule to the Income-tax Act, in paragraphs 31 and 32 of its order, and upheld the order passed by the Commissioner of Income-tax (Appeals). In the light of its reasoning regarding availability of the relief under section 80J of the Act, the Appellate Tribunal held that the assessee is also entitled to the relief under section 32A of the Act and upheld the order of the Commissioner of Income-tax (Appeals) on this score. It is thereafter at the instance of the Revenue that the Income-tax Appellate Tribunal has referred the questions of law formulated hereinabove for the decision of this court. We heard counsel for the Revenue, Mr. P. K. R. Menon, as also counsel for the respondent/assessee, Mr. P. Balachandran. Though there are three questions, they relate only to two aspects. The points involved are (1) whether the assessee is entitled to deduction for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate order). But, the Appellate Tribunal proceeded to state that the assessment year 1977-78 was almost the first year of the business of the assessee and the company itself came into existence during the assessment year 1975-76, that the decision in Kedarnath Jute Mfg. CO. Ltd.'s case [1971] 82 ITR 363 (SC) and similar decisions refer to cases where there is a specific liability and if the assessee was tinder the honest impression that there was no purchase tax on goods to be exported, he could certainly not have made an entry for the year 1975-76 and the Supreme Court decision does not also require him to do so. We are unable to appreciate what the Tribunal meant in stating the above. The Appellate Tribunal was candid in stating that the assessee itself made a proper claim for deduction in the assessment year 1975-76, but it was rejected. The claim could have been made only if the assessee was aware of the liability. If so, we are unable to appreciate the reasoning of the Appellate Tribunal when it states that the assessee was under the honest impression that there was no purchase tax on goods to be exported and so it did not make an entry for the year 1975-76. The reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case and also in the light of the Full Bench decision of this court in Karim (K. A.) and Sons' case [1982] 133 ITR 515 which is binding on us, the plea advanced by counsel for the assessee cannot hold good. The deduction claimed is for a statutory liability for payment of purchase tax which arose in the period relevant to the assessment year 1975-76. The assessee made a claim for deduction in the said year, but it was rejected. The Income-tax Officer held that it can be allowed in the year in which the payment was obligatory. That aspect is beside the point, since no plea of estoppel on that score was pleaded or made out or is in issue at this stage. The fact is that the claim was made for the assessment year 1975-76 and it was rejected. It cannot be said that the assessee was unaware of the liability or that he bona fide thought that it will not be liable to pay purchase tax or did not know of it and hence did not make a provision in that behalf. In the light of the categoric finding of the Tribunal that for the assessment year 1975-76, the assessee properly made a claim, but it was rejected by the Income-tax Officer, the other pleas regarding the non-accrual of the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 and 125 of 1986 (see [1992] 197 ITR 93), that 'processing of prawns will amount to production of articles and so it is an industrial undertaking for the purpose of section 80J of the Income-tax Act'. This court further held " that the Tribunal was justified in affording relief to the assessee herein under section 80J of the Act. " In the light of the earlier Bench decision in the case of the very same assessee in I.T.R. Nos. 124 and 125 of 1986(see [1992] 197 ITR 93), we answer question No. 2 in the affirmative-against the Revenue and in favour of the assessee. The Appellate Tribunal was justified in holding that the entire business of the assessee is eligible for the allowance under section 80J of the Act. As a sequel to our answer to question No. 2, we answer question No. 3 also in the affirmative, against the Revenue and in favour of the assessee. We hold that the assessee is entitled to investment allowance on the diesel generator and transformer under section 32A of the Income-tax Act. Question No.1 is answered in favour of the Revenue and against the assessee. Questions Nos. 2 and 3 are answered against the Revenue and in favour of the assessee. The reference is answ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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