1993 (3) TMI 49 - HC - Income Tax

Summary

Issues:
1. Allowability of weighted deduction under section 35B of the Income-tax Act for foreign travel expenses and other related expenditures.
2. Jurisdiction of the Commissioner to set aside the order of the Income-tax Officer under section 263 of the Act.

Analysis:
The judgment pertains to an assessee engaged in the business of travel agents, arranging tours in India for foreign tourists. The assessee claimed a weighted deduction under section 35B of the Income-tax Act for foreign travel expenses, including costs of gift articles, travel folders, and membership subscriptions. Initially, the Income-tax Officer allowed the deduction. However, the Commissioner, upon review, deemed the allowance erroneous and issued a notice under section 263 to reconsider the assessment order. The Commissioner opined that the Income-tax Officer had not adequately investigated the facts before allowing the deduction.

The assessee contested the Commissioner's decision before the Income-tax Appellate Tribunal, which upheld the claim for weighted deduction under section 35B and questioned the Commissioner's authority to set aside the Income-tax Officer's order. The Tribunal reinstated the relief granted by the Income-tax Officer. Subsequently, the Revenue proposed two questions for reference to the High Court, focusing on the allowability of the deduction and the Tribunal's decision to set aside the Commissioner's order under section 263.

However, during the preparation of the statement of the case, the Tribunal determined that the second proposed question was not a legal issue but a factual finding. As a result, only the first question regarding the allowability of the deduction was referred to the High Court. The High Court, noting the finality of the Tribunal's decision on setting aside the Commissioner's order, declined to answer the academic first question. Consequently, the Tribunal's decision to restore the Income-tax Officer's order stood, and no costs were awarded in the case.

In conclusion, the High Court did not address the substantive issues raised in the case due to the finality of the Tribunal's decision on setting aside the Commissioner's order, rendering the first question academic and leading to no further legal action or costs in the matter.