Law: Income Tax Act, 1961

Section: 256(2),35

(a) Income-tax--Reference---Income---Accounting---Duty draw-back and cash incentive--¬Whether Tribunal was justified in deleting additions on account of duty draw-back and cash incentive without giving finding as to method of accounting followed by assessee---Question of law---Indian Income Tax Act, 1961, S.256(2). (b) Income-tax---Reference---Export markets development allowance---Weighted deduction---Commission---Commission paid whether entitled to weighted deduction---Question of law---Indian Income Tax Act, 1961, Ss.35-B & 256(2). The Assessing Officer found that the total amount towards duty draw-back and cash incentive was Rs.3,60,573 and that a sum of Rs.3,19,827 had not been offered for taxation purposes on the ground that the assessee followed the-cash system of accounting in respect of duty draw¬back and cash incentive. The Assessing Officer did not accept the plea of the assessee and added Rs.3,19,827 on accrual basis by taking the view that the assessee was maintaining books of account on the mercantile system of accounting. The claim of the assessee for weighted deduction under section 35-B of the Income Tax Act, 1961, on the commission paid to A and F, was also not accepted by the Assessing Officer. The Tribunal deleted the addition and allowed the weighted deduction claimed. On an application to direct reference:-- Held, (i) that the question whether on the facts and in the circumstances of the case, the Tribunal was justified to allow relief to the assessee in respect of addition made on account of duty draw-back and cash incentive amounting to Rs.3,19,827 (for the year 1981-82) and Rs.1,05,610 (for the year 1982-83), without giving a finding as to whether the assessee became entitled to duty draw-back and cash incentive on cash basis or accrual basis was a question of law; (ii) that the question whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing weighted deduction under section 35-B of the Income Tax Act, 1961, for the two years, i.e. 1981-82 and 1982-83 was a question of law. CIT v. Oswal Woollen Mills Ltd. (1987) 163 ITR 207 (P&H) ref. JUDGMENT G. S. SINGHVI.---These two petitions…

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