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TMI Blog1985 (10) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... able question of law arises out of the aforementioned order of the Tribunal, we decline to make a statement of the case. 2. In the asst. yr. 1977-78, the respondent limited company engaged in the business of constructing multi-storeyed buildings had claimed an expenditre of Rs. 74, 726 under the head "Travelling conveyance, Motor Vehicle Maintenance Expenses". The break-up of these expenses were as follows: 1. Conveyance Expenses Rs. 45,862 2. Repair of cars Rs. 25,450 3. Travelling Rs. 3,414 Out of these the ITO had disallowed Rs. 61,846 and thereafter when the matter was taken up in appeal the CIT (A) had upheld the disallowance. When the matter came up in further appeal the Tribunal found firstly, that as a matter of fact the assessee s business involvement s had not decreased even though 95 per cent of its assignment to construct "Saga Apartments" at Tilak Marg, New Delhi had already been achieved. This finding of the Tribunal was based on the examination of the balance sheet of the assessee-company and on going through the note which had been submitted before the CIT (A) during the appellate proceedings. In other words, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we will accept the statement made by the ld. counsel of the respondent as a statement at bar and hold that since the Department have accepted the correctness of the aforesaid decision of the Special Bench of the ITAT, the second question as proposed by the CIT also ceases to be a referable question of law. 3. In the result reference application filed by the CIT is rejected. 31st Aug., 1984 S. S. MEHRA, J.: I have the benefit of going through the detailed order prepared by my ld. brother Shri B. Gupta, but regret my inability to fully agree with the conclusion arrived at. The facts have in detailed been discussed in the said order. The revenue raised two question. Question No. 1 pertains to deletion of certain disallowance s and question No. 2 pertains to the issue as to whether the assessee-company be treated as an industrial company. My ld. brother by the said order has rejected the reference application. So far as question No. 1 is concerned, there appears to be no difficulty. Therefore reference appears to have been rightly declined. As far as question No. 2 is concerned, I am of the considered view that it is definitely a reasonable question of law and the refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to lower rate of taxation. The ITO did not deal with this point but several other disallowance s were made objecting to which the assessee carried the matter by way of appeal before the Tribunal. After dealing with all these disallowance s, the Bench with regard to the claim of the assessee-company as an industrial company observed under: "Lastly, we find that the assessee-company which was engaged in the business of constructing multi storeyed buildings would be entitled to be treated as an industrial company in view of the Special Bench decision of the Tribunal dated 20th of Oct. 1983 in the case of ITO vs. Hydle Constructions (P) Ltd. That decision had been made available to us by the learned counsel and we find that decision would squarely apply to the appellant-company also. We accordingly direct the recalculation of the income tax demand in the case of the appellant on the basis that it was an "industrial company". Subsequently, a miscellaneous application was filed by the ITO before the Tribunal by pointing out that the ground that the assessee should be assessed as an industrial company did not arise out of the orders passed by the lower authorities and, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itude and reaction of the Department in regard to the Special Bench decision, which was followed by the Members of the Bench. It is now a common ground that no reference application was filed by the Department raising any question of law as arising out of the decision of the Special Bench of the Tribunal referred to above. This means the principles enunciate by the Special Bench in that order were accepted by the Department. It is no doubt that the Special Bench remitted the matter to the ITO for further enquiry bout the further enquiry was not on the question as to whether the assessee-company was an industrial company or not but on the question whether the requirement of the law that an industrial company should derive income mainly from the activities which made it industrial company were present or not. If the income from those activities formed a major portion of the income then the company could be regarded as industrial company. Otherwise even an industrial company would not be entitled to the benefit of the lower rate of tax. it is to find out this factual position as to whether its income was mainly from this activity or not that the matter was remitted to the ITO but the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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