1992 (12) TMI 22 - HC - Income Tax

Summary

Issues Involved:
1. Entitlement to weighted deduction under section 35B(1)(b)(iii) of the Income-tax Act, 1961.
2. Jurisdiction of the High Court to entertain the reference under section 256 of the Income-tax Act, 1961.

Comprehensive, Issue-Wise Detailed Analysis:

1. Entitlement to Weighted Deduction under Section 35B(1)(b)(iii):
The primary issue was whether the assessee was entitled to a weighted deduction under section 35B(1)(b)(iii) for certificate charges, freight, and insurance charges incurred in respect of its export trade. The Tribunal upheld the assessee's claim for weighted deduction, following the Bombay High Court's decision in CIT v. Eldee Wire Ropes Ltd. [1978] 114 ITR 485. The Tribunal distinguished this case from Ullalnarayan Mallya's case [1976] 1 KLJ 487 decided by the Karnataka High Court. The Tribunal's decision was based on the precedent set by the Bombay High Court, as the regular assessment was made within its jurisdiction.

2. Jurisdiction of the High Court to Entertain the Reference:
The second issue was whether the Karnataka High Court had jurisdiction to entertain the reference under section 256 of the Income-tax Act, 1961, given that the assessment order was made by the Income-tax Officer in Bombay. The assessee's counsel argued that the reference should be made to the Bombay High Court since the assessment order originated there. The Revenue's counsel contended that all further proceedings could continue as if the original order was made by the transferee officer, following the transfer of the case.

The court examined precedents including Pannalal Binjraj v. Union of India [1957] 31 ITR 565 and CIT v. Bidhu Bhusan Sarkar [1967] 63 ITR 278, which clarified that only proceedings initiated by the Income-tax Officer could be continued by the transferee officer. The Supreme Court did not hold that appellate and reference proceedings also get transferred.

The court further analyzed decisions from other High Courts:
- Rajasthan High Court in Uma Kant and Co. (P.) Ltd. v. CIT [1977] Tax LR 476: Held that jurisdiction is determined by the location of the Assessing Officer.
- Delhi High Court in Seth Banarsi Dass Gupta v. CIT [1978] 113 ITR 817: Emphasized that the jurisdiction of the High Court is determined by the location of the Assessing Officer, not by the location of the Tribunal's Bench.
- Delhi High Court in Birla Cotton, Spinning and Weaving Mills Ltd. v. CIT [1980] 123 ITR 354: Reiterated that the jurisdiction is determined by the location of the Assessing Officer and not by the Tribunal's Bench.

The court concluded that the jurisdiction of the High Court to entertain a reference under section 256 is determined by the location of the Assessing Officer. Since the assessment order was made by the Income-tax Officer in Bombay, the reference should be made to the Bombay High Court. The court emphasized that the law should be clear, certain, and simple, and the location of the assessing authority is easily identifiable.

Conclusion:
The Karnataka High Court held that it did not have jurisdiction to entertain the reference under section 256 of the Income-tax Act, 1961, as the assessment order was made by the Income-tax Officer in Bombay. Consequently, the reference was returned unanswered.