1993 (7) TMI 111 - AT - Income Tax

Summary

Issues:
1. Whether the Tribunal was justified in directing the Assessing Officer to allow investment allowance of the assessee for the assessment year 1981-82.
2. Whether the Tribunal was justified in confirming the deletion of additions made by the Assessing Officer under sections 40A(3) and 37(3A) of the IT Act, 1961 for the assessment year 1984-85.

Analysis:

Issue 1: Investment Allowance for AY 1981-82
The Revenue filed a reference application under section 256(1) of the IT Act, 1961, challenging the Tribunal's decision directing the Assessing Officer to allow investment allowance to the assessee for the assessment year 1981-82. The Assessing Officer had withdrawn the investment allowance through a rectificatory order under section 154 of the Act, which was contested by the assessee. The first appellate authority upheld the rectificatory order. However, the Tribunal allowed the assessee's appeal, stating that the issue was debatable and invoking section 154 was not justified. The Tribunal found no referable question of law in the matter and rejected the reference application.

Issue 2: Deletion of Additions under Sections 40A(3) and 37(3A) for AY 1984-85
The Revenue raised multiple questions regarding the deletion of additions made under sections 40A(3) and 37(3A) of the IT Act, 1961 for the assessment year 1984-85. The Tribunal upheld the deletion of the addition under section 40A(3) by the first appellate authority, citing exceptional and unavoidable circumstances for cash payments made by the assessee. The Tribunal also refused to interfere with the deletion of the addition under section 37(3A) as the expenses in question did not fall within the ambit of that section. The Tribunal found no referable question of law in these matters and rejected the reference applications.

In both cases, the Tribunal carefully considered the facts and findings before concluding that no referable question of law arose from the orders in question. The Tribunal's decisions were based on the interpretation of relevant provisions of the IT Act and the specific circumstances of each case. The reference applications were ultimately rejected, affirming the Tribunal's original decisions.