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Issues:
1. Disallowance of interest paid to directors under section 40A(8) of the Income-tax Act. 2. Disallowance of depreciation and investment allowance. 3. Rejection of reference applications by the Tribunal as time-barred and the maintainability of the applications under section 256(2) of the Act. Analysis: 1. The petitioner, a private limited company, faced disallowance of interest paid to directors under section 40A(8) of the Income-tax Act during the assessment year 1982-83. The Income-tax Officer added the disallowed amount to the total income of the petitioner. However, on appeal to the Commissioner of Income-tax (Appeals), the disallowance was deleted, but the Tribunal later restored the disallowance. The Tribunal's order was served on the petitioner on May 15, 1986, with the last day for filing a reference application being July 14, 1986. The petitioner filed the reference applications out of time, seeking condonation of the delay. The Tribunal rejected the reference applications as time-barred, leading the petitioner to file petitions under section 256(2) of the Act requesting a direction to the Tribunal to state a case referring two questions of law. 2. The Tribunal's rejection of the reference applications was based on being time-barred, not on the ground of no question of law arising. The absence of a provision similar to section 66(3) of the Indian Income-tax Act, 1922, in the current Act indicates a deliberate departure. The Tribunal's rejection of the applications as time-barred does not equate to a refusal based on no question of law arising, a fundamental requirement for maintaining an application under section 256(2) of the Act. Previous court decisions highlighted that applications under section 256(2) of the Act are only maintainable when the Tribunal declines to state a case on the ground of no question of law arising, not when the rejection is due to being time-barred. Therefore, the applications for references filed by the petitioner under section 256(2) of the Act were deemed not competent and maintainable, leading to their dismissal. 3. The court referenced previous decisions such as S. P. Jaiswal v. CIT [1969] 73 ITR 179 (P & H) and Govind Singh Bhagwan Singh v. ITO [1972] 84 ITR 214 (All) to support the conclusion that applications under section 256(2) of the Act are not maintainable when the rejection is based on being time-barred rather than on the ground of no question of law arising. The court emphasized the distinction between the provisions of the current Act and the Indian Income-tax Act, 1922, regarding the maintainability of reference applications in such cases. Ultimately, the court held that the reference applications filed by the petitioner were not competent and deserved dismissal, along with costs awarded to the respondent. This detailed analysis of the judgment provides insights into the issues related to the disallowance of interest, depreciation, and investment allowance, as well as the rejection of reference applications based on being time-barred, highlighting the legal reasoning and precedents considered by the court in arriving at its decision.
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