LALLACHERRA TEA COMPANY PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX
LAWS(GAU)-1994-1-6
HIGH COURT OF GAUHATI
Decided on January 12,1994

LALLACHERRA TEA CO. (PVT.) LTD. Appellant
VERSUS
COMMISSIONER OF INCOME-TAX Respondents

JUDGEMENT

M.K. Sharma, J. - (1.)THIS is an application under Section 256(2) of the Income-tax Act, 1961, filed by the assessee relating to the assessment year 1988-89 praying for a direction to the learned Tribunal to refer the following five questions of law for the opinion of this court :
"1. Whether, within the meaning of Section 115J, the Tribunal was justified in not reducing the 30 per cent. of taxed income of the year from the income computed as per the provisions of the Income-tax Act, 1961, for the purpose of setting off the earlier years' depreciation and losses ?

2. Whether the deeming provision of Sub-section (1) of Section 115J restricts the deduction of the taxed income of the year from the total income computed under the Income-tax Act for the purpose of setting off the losses arid depreciation of earlier year(s) ?

3. Whether the Tribunal was justified in applying the fiction created under Section 115J beyond the legitimate field by not allowing the deduction of the taxed income of Rs. 74,450 of the year out of the income computed under the provisions of the Income-tax Act, 1961, of Rs. 2,55,866 for the purpose of setting off the earlier years' losses ?

4. Whether the provisions of Section 115J for levy of income-tax on the deemed income is ultra vires being discriminatory ?

5. Whether the Tribunal misdirected itself in law in basing the conclusion on a wrong interpretation of Sub-section (2) of Section 115J ?"

(2.)THE aforesaid application arose out of the order passed by the learned Tribunal rejecting the reference application filed before it under Section 256(1) of the Income-tax Act 1961. By its order dated April 19, 1993, passed in R. A. No. 50/(Gau) of 1992 arising out of the I. T. A. No. 777/(Gau) of 1990, the learned Tribunal while rejecting the aforesaid reference had held that the questions proposed by the assessee could not be referred in view of the clear provisions of Sub-section (2) of Section 115J of the Income-tax Act. THE learned Tribunal further held that the questions proposed by the assessee appear to be self-evident for the reference. So far question No. 4 was concerned, the learned Tribunal was of the opinion that it raised the question of vires and discrimination which did not arise out of the order of the Tribunal and, accordingly, the learned Tribunal rejected the reference application filed by the assessee.
We have heard Mr. G.K. Joshi, learned counsel appearing for the assessee, and also Mr. D.K. Talukdar, learned counsel appearing for the Revenue.

On a perusal of the orders passed by the learned Tribunal and on hearing learned counsel, we are of the opinion that the questions of law proposed by the assessee are pure questions of law as they relate to the interpretation of Sub-section (1) and Sub-section (2) of Section 115J of the Income-tax Act, 1961. However, in our opinion, the learned Tribunal was justified in holding that so far question No. 4 was concerned, it raises the question of vires and discrimination which cannot be gone into by the Tribunal. And so far question No. 5 is concerned, we do not think that it gives rise to any question of law and accordingly we do not propose to call for any reference in respect of questions Nos. 4 and 5. We, accordingly, direct the learned Tribunal to refer to this court a statement of the case on the aforesaid three questions, namely, questions Nos. 1, 2 and 3 for the opinion of this court. The application, therefore, stands partly allowed. We, however, make no order as to costs.



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