Rc/170/2000 Of M/S Hyderabad Allwyn Ltd.hyd v. The Commissioner Of Incometax.hyd

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDA RAMR.C.No.170 of 2000 ORDER:(per the Hon’ble Sri Justice L.Narasimha Reddy) This reference is made under Section 256 of the Income Tax Act,1961 (for short, ‘the Act’) by the assessee. The applicant is a company owned by the Government of AndhraPradesh. For successive assessment years, it has been seekingdeduction of gratuity and the amount representing fluctuations in theforeign exchange. It was also maintaining books of account and theassessment was being made by making reference to Section 115J ofthe Act. For the Assessment Years 1988-89 and 1989-90, the applicantdid not mention the figures referable to the gratuity and the amountrepresenting the fluctuation in the foreign exchange in the books ofaccount, for those years. No provision was made for claimingdeduction of those two amounts. The result was that a higher amountof profit was shown excluding these amounts. At the stage of assessment, the applicant insisted that theamounts referred to above, must be deducted from the income. TheAssessing Officer did not agree for that on the ground that provisionwas not made for these two amounts in relevant profit and lossaccount. The matter was carried in appeal before the Commissioner ofAppeals. The appeal was allowed by the Commissioner. Aggrievedby that, the Revenue carried the matter in further appeal to theHyderabad Bench ‘A’ of the Income Tax Appellate Tribunal by filingI.T.A.Nos.299/Hyd/92 and 1775/Hyd/92. The appeals were allowed bythe Tribunal through its order dated 25.11.1997. Aggrieved by the order in the appeal, the applicant filed R.A.Nos.77/Hyd/98 and78/Hyd/98 under Section 256 (1) of the Act with a prayer to refer thefollowing three questions to this Court for answer: 1.Whether on the facts and in the circumstances of thecase, the Income-tax Appellate Tribunal is justified incoming to the conclusion that the assessee-company isnot entitled to claim deductions towards gratuity liabilityand extra depreciation on additional cost due to additionalliability owing to exchange fluctuations from its profits asper its books while computing book profits u/s.115J of theI.T.Act?case, the Income-tax Appellate Tribunal is justified incoming to the conclusion that the assessee-company isnot entitled to claim deductions towards gratuity liabilityand extra depreciation on additional cost due to additionalliability owing to exchange fluctuations from its profits asper its books while computing book profits u/s.115J of theI.T.Act?2.Whether on the facts and in the circumstances of thecase, the Income-tax Appellate Tribunal was correct incoming to the conclusion that merely because the gratuityliability and depreciation were not provided or written off inthe accounts, the assessee-company is not entitled toclaim deduction of the same in computing the book profitswhile applying the provisions of S.115J of the I.T.Act?case, the Income-tax Appellate Tribunal was correct incoming to the conclusion that merely because the gratuityliability and depreciation were not provided or written off inthe accounts, the assessee-company is not entitled toclaim deduction of the same in computing the book profitswhile applying the provisions of S.115J of the I.T.Act? 3.Whether on the facts and in the circumstances of thecase, the appellant is entitled to the deduction of the sumsof gratuity liability and extra depreciation, as deductionfrom the profits declared by it for arriving at the correctamount of book profits as provided under parts (ii) and (iii)to Schedule VI to the Companies Act for computing itsincome chargeable to tax u/s.115J of the I.T.Act?case, the appellant is entitled to the deduction of the sumsof gratuity liability and extra depreciation, as deductionfrom the profits declared by it for arriving at the correctamount of book profits as provided under parts (ii) and (iii)to Schedule VI to the Companies Act for computing itsincome chargeable to tax u/s.115J of the I.T.Act? Accordingly, the reference is made to this Court. 3.Whether on the facts and in the circumstances of thecase, the appellant is entitled to the deduction of the sumsof gratuity liability and extra depreciation, as deductionfrom the profits declared by it for arriving at the correctamount of book profits as provided under parts (ii) and (iii)to Schedule VI to the Companies Act for computing itsincome chargeable to tax u/s.115J of the I.T.Act?case, the appellant is entitled to the deduction of the sumsof gratuity liability and extra depreciation, as deductionfrom the profits declared by it for arriving at the correctamount of book profits as provided under parts (ii) and (iii)to Schedule VI to the Companies Act for computing itsincome chargeable to tax u/s.115J of the I.T.Act? Accordingly, the reference is made to this Court. Heard the learned counsel for the parties. The questions that are referred to this Court are no doubtimportant in their purport. However, we decline to answer them for tworeasons. The first is that the company is under liquidation and in spiteof notice being issued to the Official Liquidator, he did not turn up. Thesecond is that the answer given, one way or the other, is not going tohave much impact since the company is under liquidation. L.NARASIMHA REDDY, J Date: 02.09.2014 va CHALLA KODANDA RAM, J