2004 (5) TMI 39 - HC - Income Tax

Questions proposed at the instance of the Revenue relate to certain additions/deletions made by the Assessing Officer and later deleted by the CIT (Appeals) and finally upheld in favour of the assessee by the Tribunal in second appeal filed by the parties (Revenue). Yet another question is in regard to giving benefit to the assessee under section 43B and in relation to addition/deletion made under section 40A(3) read with rule 6DD(j) of the Income-tax Rules - We are of the view that no referable question of law arises on the questions proposed by the Revenue on any of the claims made by the assessee as they are all based on questions of facts and must rest at the level of the Tribunal

Summary

Issues:
Application under section 256(2) of the Income-tax Act for reference to the High Court on questions proposed by the Revenue regarding additions/deletions made by the Assessing Officer, benefit under section 43B, and deductions under section 40A(3) read with rule 6DD(j).

Analysis:
The judgment pertains to an application by the Revenue under section 256(2) of the Income-tax Act seeking reference to the High Court on questions arising from various cases connected to a common order passed by the Income-tax Appellate Tribunal. The Tribunal had declined to refer the questions to the High Court, deeming them as pure questions of fact, not questions of law. The questions related to additions/deletions made by the Assessing Officer, benefit under section 43B, and deductions under section 40A(3) read with rule 6DD(j) for different assessment years.

Regarding the deletions allowed by the Commissioner of Income-tax (Appeals), upheld by the Tribunal, it was held that these deletions were justified in the absence of material to support the additions made by the Assessing Officer. The Tribunal's decision to reject the Revenue's application under section 256(1) was deemed justified as the questions proposed were factual in nature, not legal. The High Court concurred, stating that determining whether an addition or deletion should be allowed is a factual inquiry, not a legal question unless it involves the interpretation of specific sections of the Income-tax Act.

The judgment emphasized that deductions claimed by the assessee require factual inquiry and consideration of explanations provided, which is not a question of law unless the claim is entirely perverse or illegal. The Tribunal's findings on deductions under section 43B and section 40A(3) read with rule 6DD(j) were upheld as factual, not legal issues requiring High Court intervention. The High Court concluded that no referable question of law arose from the Revenue's proposed questions, all being based on facts and falling within the Tribunal's jurisdiction.

In light of the above analysis, the High Court dismissed the Revenue's application, highlighting the well-settled principle that referable questions of law must arise for High Court consideration under section 256(2) of the Act. As no such questions were identified in this case, the application was rejected, and no costs were awarded.

Conclusion:
The High Court's judgment dismissed the Revenue's application under section 256(2) of the Income-tax Act for reference to the High Court on questions related to additions/deletions, benefit under section 43B, and deductions under section 40A(3) read with rule 6DD(j). The judgment emphasized that factual inquiries and determinations do not constitute questions of law unless they involve the interpretation of specific legal provisions. The Tribunal's findings on the deductions in question were upheld as factual and not warranting High Court intervention, leading to the dismissal of the application.