1987 (7) TMI 39 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this case are related to the interpretation of the Income-tax Act, 1961, specifically concerning the allowance of extra shift allowance on machinery in a factory, and the applicability of a circular issued by the Board of Revenue.

Judgment Details:

Issue 1: Extra Shift Allowance Interpretation
The Revenue filed a petition under section 256(2) of the Income-tax Act, seeking a reference to the High Court on the decision of the Appellate Tribunal regarding the extra shift allowance. The Commissioner of Income-tax had set aside the assessment order, directing a fresh assessment based on the machinery's actual working during the relevant period. The Appellate Tribunal upheld the Income-tax Officer's decision to grant extra shift allowance on all machinery, citing a circular from the Board of Revenue. The High Court held that the circular, being issued under section 119 of the Act, carries legal weight and binds all Department officers. The Court emphasized that such circulars provide administrative relief and can deviate from statutory provisions. It was established through various court precedents that these circulars are binding and can be relied upon even if introduced during High Court proceedings. The High Court concluded that the Tribunal's decision to consider the circular was justified, and no legal question arose for reference.

Issue 2: Applicability of Circular
The main contention raised by the Revenue was that the circular from the Board of Revenue should not override the law, as interpreted in a previous Calcutta High Court case. However, the High Court reiterated that the circulars issued by the Board serve as administrative relief and can relax the strict application of the law. The Court emphasized that the circulars are binding on Department officers and can be relied upon by taxpayers. The High Court dismissed the Revenue's argument, affirming the Tribunal's decision to consider and apply the circular in the case at hand.

In conclusion, the High Court dismissed the Revenue's petition under section 256(2) of the Income-tax Act, upholding the Tribunal's decision regarding the extra shift allowance and the applicability of the circular issued by the Board of Revenue.