1992 (5) TMI 194 - HC - Income Tax

Summary

Issues:
1. Condonation of delay in filing an application under section 256(2) of the Income-tax Act.
2. Interpretation of the provisions of the Limitation Act in relation to condonation of delay.
3. Merits of the petition under section 256(2) regarding the deductibility of certain expenditures.

Analysis:

Issue 1: Condonation of Delay
The petitioner filed an application under section 256(2) seeking reference of questions to the Court. The application was filed one day late due to a misunderstanding about the Court's opening date. The respondents contended that the Court lacked the power to condone the delay. However, the Court disagreed, stating that while the Act specifies a limitation period for filing under sections 256(1) and 256(2), the power to condone delay is not explicitly excluded under section 256(2). The Court referred to the provisions of the Limitation Act and held that section 5 of the 1963 Act allowed for the condonation of delay in filing applications required in Court.

Issue 2: Interpretation of Limitation Act Provisions
The Court analyzed the provisions of the Limitation Act, emphasizing that section 5 of the 1963 Act permits the condonation of delay even for applications required to be filed in Court. The Court cited section 29(2) of the Limitation Act, which allows for the application of section 3 to special or local laws unless expressly excluded. The Court concluded that it had the jurisdiction to exercise powers under section 5 of the 1963 Act, as confirmed by a previous decision of the Gauhati High Court.

Issue 3: Merits of the Petition under Section 256(2)
Regarding the deductibility of expenditures, the Court considered two questions. The first question related to the allowability of a portion of technical know-how expenditure as revenue expenditure. The Court directed the Tribunal to refer this question to the Court. The second question concerned the deductibility of a payment made by the assessee to an association as business expenditure. Citing a previous decision, the Court found the answer to the second question self-evident based on established principles and declined to refer it to the Court. The Court's decision was influenced by the application of Supreme Court decisions in similar cases.

In conclusion, the Court allowed the application for condonation of delay, directed the Tribunal to refer the first question to the Court, and declined to refer the second question based on established legal principles.