Law: Income Tax Act, 1961

Section: 37

(a) Income-tax-----Business expenditure---Company---Liability for payment of surtax---Not deductible---Indian Income Tax Act, 1961, S.37. (b) Income-tax----Capital or revenue expenditure---Loss arising on account of foreign remittances and revaluation of foreign liabilities relating to acquisition of capital assets---Capital expenditure---Indian Income Tax Act, 1961, S.37. (c) Income-tax----Accounting---Reference---Determination of method of accounting in recording liability for pension in books of assessee---Tribunal directed to decide question---Indian Income Tax Act, 1961, Ss. 145 & 256. The liability for surtax is not an allowable deduction in computing the total income of a company for income-tax purposes. Lubrizol India Ltd. v. CIT (1991) 187 ITR 25 (Bom.) fol. The loss arising on account of foreign remittances and revaluation of foreign liabilities to the extent it relates to acquisition of capital asset is capital expenditure. Padamjee Pulp and Paper Mills Ltd. v. CIT (1994) 210 ITR 97 (Bom.) fol. Regarding the method of accounting followed by the assessee in recording liability for pension the Tribunal had remanded the matter to the Appellate Assistant Commissioner. On a reference, it was submitted on behalf of the assessee that no fruitful purpose would be served after the long lapse of 30 years if the matter were examined by the Appellate Assistant Commissioner instead of the Tribunal. The Revenue also did not have any objection to the grant of the prayer of the assessee that the matter be heard by the Tribunal instead of the Appellate Assistant Commissioner: Held, that the Tribunal could consider the controversy in the light of its own orders in relation to the assessment years 1971-72 and 1972-73 and the orders of the High Court on the reference application in accordance with law after giving proper opportunity of hearing to both the parties. JUDGMENT DR. B.P. SARAF, J.--- By this reference under section 256(1) of the Income Tax Act, 1961 (for short "the Act"), made at the instance of the assessee, the Tribunal has referred the following three questions to this Court for opinion: "(1) Whether, on the facts and in the circumstances of the case,…

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