9911796707
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Issues:
1. Relief under section 80J for the Viva division of the assessee-company for the assessment years 1973-74, 1974-75, and 1975-76. 2. Treatment of expenses incurred in providing tea, coffee, etc., to business constituents as entertainment expenses for the assessment year 1975-76. Analysis: The judgment delivered by S. Ranganathan J. and H. C. Goel pertains to three applications by the Commissioner of Income-tax under section 256(2) concerning the assessment years 1973-74, 1974-75, and 1975-76. The common question raised in all three years is whether the Income-tax Appellate Tribunal was correct in allowing relief under section 80J for the Viva division of the assessee-company. The Income-tax Officer and the Commissioner of Income-tax (Appeals) had initially denied the relief, arguing that the Viva unit was not entitled to it as it was formed by the transfer of machinery previously used by the assessee. However, the Tribunal granted the relief, considering the Viva unit as an expansion of the existing unit. The court found that a question of law arises from this discrepancy and directed the Tribunal to refer the question for decision. In addition, for the assessment year 1975-76, another issue arose regarding the treatment of expenses amounting to Rs. 33,302 incurred in providing tea, coffee, etc., to business constituents. The question was whether these expenses should be considered entertainment expenses, especially in light of the amendment introduced by Explanation 2 to section 37(2A). The court deemed this to be a question requiring reference and directed the Tribunal to state and refer this question of law for the decision of the court specifically for the assessment year 1975-76. The Tribunal was instructed to provide a consolidated statement of case for all three assessment years, and the applications were disposed of without costs.
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