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Issues:
1. Disallowance of surcharge on electricity consumed. 2. Excessive payment for annealing and pickling services. 3. Applicability of section 40A(2) regarding payments to related parties. Analysis: 1. The judgment involves two applications under section 256(2) of the Income-tax Act, 1961, by the Revenue and the assessee, both related to the assessment year 1983-84. The primary issue in the first application was the disallowance of a claim of Rs. 10,94,326 by the assessee for surcharge on electricity consumed. The Tribunal allowed the claim, considering it a statutory liability, leading to an appeal by the Revenue. However, the High Court declined to refer the questions raised by the Revenue, stating that the issue of electric surcharge being a statutory liability was settled. Therefore, the application filed by the Revenue was dismissed. 2. The second issue involved an excessive payment made by the assessee to Haryana Steel Products for annealing and pickling services. The Assessing Officer deemed the payment excessive and unreasonable, setting a lower reasonable rate. The Commissioner of Income-tax (Appeals) also found the payment excessive but determined a different reasonable rate. Both parties appealed to the Tribunal, which upheld a specific rate per metric ton as reasonable. Furthermore, the Tribunal found the payment made to a trust where the beneficiaries were related to a director of the company, invoking section 40A(2). The High Court, referencing previous judgments, concluded that no question of law arose from this issue, leading to the dismissal of the application by the Revenue. 3. The final issue revolved around the applicability of section 40A(2) regarding payments made to related parties. The assessee sought to refer seven questions as questions of law, but the High Court found only one question suitable for reference. After considering arguments from both parties and legal precedents, the High Court determined that the question raised by the assessee did not give rise to a question of law. Consequently, the application filed by the assessee was also dismissed. Overall, the High Court's judgment addressed various tax-related disputes, including the treatment of specific liabilities, reasonableness of payments for services, and the application of statutory provisions regarding related party transactions. The Court's decisions were based on established legal principles and previous rulings, ultimately leading to the dismissal of both applications.
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