Law: Income Tax Act, 1961

Section: 256,256(2)

[Indian Income Tax Act, 1961]........Section 256 (2)-Reference to High Court--Question of fact-Ceramic industry-Claim of consumption of Proper ratio of consumption of cool to production-Tribunal not giving reasons for its finding and reference to records reflecting a different position Case remanded to Tribunal. The assessee-company was manufacturing ceramic articles including pipes. In computing the loss for the assessment year 1968-69, the assessee claimed deduction of Rs. 1,05,429 under the head "consumption of coal in the manufacturing process". The Income Tax Officer deleted a sum of Rs. 45,000 out of the same as in his view the claim was excessive. In second appeal, the Appellate Tribunal took into consideration the fact that, in the earlier years, the consumption of coal was in the ratio of 57.8% to 67.7% against the number of pipes produced and therefore, the ratio of 617% for 1967-68 and 704% for 1968-69 would not be unreasonable and, finally, upheld addition of Rs. 30,000, On a reference ; Held, that though the question was one of fact, the decision of the Tribunal was not justified, as the Tribunal had not given reasons, and reference to records reflected a different position. On the other hand, it would be reasonable to adopt the past records and tax the average ratio somewhere between 60% and 65% on the finding of the Appellate Assistant Commissioner and on the basis of the certificate furnished by the Indian Ceramic Society that expenses should range between 50% and 60%. The Tribunal was, therefore, directed to quantify accordingly. JUDGMENT R. N. MISRA J.--Under the direction of this court on an application of the assessee under Section 256 (2) of the Income Tax Act, 1961, the Appellate Tribunal has stated a case and referred the following question for opinion of the Court: "Whether, in the facts and circumstances of the case, without rejecting the accounts, the Appellate Tribunal Was justified in sustaining disallowance of the expenditure of Rs. 30,000 on coal account and directing addition of that amount to the assessees income for the year ?" The year of assessment is 1968-69, Assessee is a company engaged in the manufacture of various ceramic…

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