1999 (2) TMI 40 - HC - Income Tax

Reference, Business Expenditure, Extra Shift Allowance, Question Of Law, Reference, Depreciation

Summary

Issues:
1. Interpretation of entry 9A of old Appendix I regarding extra shift allowance on fork-lift trucks.
2. Exemption of leave salary above the limit under section 10(10AA) from disallowance under section 40A(5).

Analysis:

Issue 1:
The dispute in question No. 1 revolved around whether fork-lift trucks fall under entry 9A of the old Appendix I, impacting the availability of extra shift allowance on depreciation. Initially, the Assessing Officer concluded that fork-lift trucks were akin to motor tractors and harvesting combines under entry 9A, thus disallowing the claimed depreciation. Subsequently, the Commissioner of Income-tax upheld this disallowance. However, the Tribunal disagreed, determining that fork-lift trucks did not align with the specified categories in entry 9A. The Tribunal's decision was based on factual analysis, leading to the conclusion that the assessee was entitled to depreciation even if considered under entry 9A. Ultimately, the High Court found no legal question to refer regarding this issue, as the Tribunal's decision rendered question No. 1 moot.

Issue 2:
Regarding question No. 2, the focus shifted to the treatment of leave salary exceeding the limit set by section 10(10AA) concerning disallowance under section 40A(5) of the Income-tax Act. This matter was deemed a pure question of law by the High Court. After hearing arguments from both parties, the Court directed the Tribunal to formulate a statement of case solely for question No. 2, which pertained to the exemption status of leave salary surpassing the prescribed limit under section 10(10AA) from disallowance under section 40A(5). Consequently, the High Court partially allowed the application, ruling in favor of referring question No. 2 for its opinion, while disposing of the application with no cost implications.