1989 (7) TMI 58 - HC - Income Tax

Summary

Issues:
1. Disallowance of interest prior to production commencement
2. Usage of machinery in premises of another company
3. Insurance charges on machinery
4. Development rebate eligibility
5. Disallowance of income on security deposit
6. Addition of closing stock based on estimation
7. Disallowance of foreign tour expenses
8. Disallowance of presentation expenses
9. Deletion of legal charges addition
10. Claim of relief under section 80J
11. Computation of depreciation for scientific research assets
12. Depreciation rate for SSF and tyre cord units
13. Deduction in first-grade production

Analysis:
1. The petitioner sought a direction for the Tribunal to refer various questions of law, including the disallowance of interest prior to production commencement. The High Court directed the Tribunal to refer this question for consideration.

2. The issue of machinery usage in another company's premises was considered, and the High Court found that the questions related to this issue did not arise as questions of law. Therefore, these questions were not directed to be referred.

3. Regarding insurance charges on machinery, the High Court directed the Tribunal to refer the question of whether the assessee was entitled to full insurance charges despite a previous confirmation of disallowance to the extent of 50% in a prior assessment year.

4. The eligibility for development rebate on units not falling under priority industries was disputed. The High Court found that this question did not warrant a reference as it did not raise any legal issue.

5. The disallowance of income on security deposit was challenged, and the High Court directed the Tribunal to refer this question for consideration.

6. An addition to closing stock based on estimation was contested. The High Court deemed this a question of fact and not a legal issue, as it involved an estimate ordered to be deleted by the Tribunal.

7. Disallowance of foreign tour expenses was examined, and the High Court concluded that this was a question of fact, especially when the expenses had been allowed for executives and directors.

8. The disallowance of presentation expenses was disputed, and the High Court found that this disallowance, related to foreign business associates, did not raise a legal question upon deletion by the appellate authority.

9. The deletion of legal charges addition was challenged, and the High Court directed the Tribunal to refer this question for consideration.

10. The claim of relief under section 80J was examined, and the High Court found that the issue was self-explanatory, not warranting a reference.

11. The computation of depreciation for scientific research assets was disputed, and the High Court found that the Tribunal's direction to follow the Supreme Court's judgment did not raise a legal question.

12. The depreciation rate for specific units was contested, and the High Court directed the Tribunal to refer this question for consideration.

13. The deduction in first-grade production was challenged, and the High Court found that this question did not warrant a reference, following a similar decision by the Allahabad High Court for a prior assessment year.

The High Court directed the Tribunal to refer specific questions for consideration, disposing of the petition without costs.