Law: Income Tax Act, 1961

Section: 256

(a) Income-tax----Reference---Business expenditure--- Insurance charges---Insurance charges disallowed in part in earlier year---Entire insurance charges whether allowable in relevant year---Question of law. The question whether the Tribunal was correct in law and on facts in holding that there was no finding that the machinery installed in the premises of JKCM was not used for the purposes of the business and profession and there by directing the Income-tax Officer to allow full insurance charges on such machinery was question of law. (b) Income-tax--- ----Reference---Business expenditure---Disallowance---Deduction of amount disallowed in particular year---Whether valid---Question of law. The question whether the Tribunal was correct in law and on facts in reducing the disallowance to 25% of the total expenditure of Rs.43,545 incurred under the head "Kamla Retreat expenses" when in fact the Tribunal itself, on similar facts in earlier years, had upheld the disallowance at 50% of the total expenses was a question of law. (c) Income-tax--- ----Reference---Business expenditure---Estimate of "mess expenses"---Question of fact. The question regarding estimate of "mess expenses" was a question of fact. C.I.T. v. J.K. Synthetics Ltd. (No.2) (1990) 181 ITR 537 (Delhi) ref. JUDGMENT KIRPAL, J.---In this petition under section 256(2) of the Income Tax Act, the Commissioner of Income-tax is seeking reference of the following questions to this Court: "(i) Whether the Income-tax Appellate Tribunal was correct in law and on facts in holding that there is no fording that the machinery installed in the premises of JKCM was not used for the purpose of the business and profession and thereby directing the Income-tax Officer to allow full insurance charges on such machinery, when in fact the Income-tax Appellate Tribunal itself, on similar facts in earlier years, has upheld such a disallowance at 50% of the total disallowance in assessment year 1975-76? (ii) Whether the Income-tax Appellate Tribunal was correct in law and on facts in reducing the disallowance to 25% of the total expenditure of Rs.43,545 incurred under the head Kamla Retreat expenses', when in fact the Income-tax…

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