H.P.FINANCIAL CORPORATION LTD Vs. THE COMMISSIONER OF INCOME-TAX, PATIALA
LAWS(HPH)-1997-5-48
HIGH COURT OF HIMACHAL PRADESH
Decided on May 27,1997

H.P.FINANCIAL CORPORATION LTD Appellant
VERSUS
THE COMMISSIONER OF INCOME -TAX, PATIALA Respondents


Referred Judgements :-

JONES V. CARMARTHEN CORPORATION [REFERRED TO]
USHERS WILTSHIRE BREWERY LIMITED V. BRUCE [REFERRED TO]
INDIAN MOLASSES CO PRIVATE LIMITED VS. COMMISSIONER OF INCOMETAX WEST BENGAL [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. INDIAN JUTE MILLS ASSOCIATION [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. MADRAS INDUSTRIAL INVESTMENT CORPORATION LIMITED [REFERRED TO]
WESTMINISTER BANK, LTD, VS. RICHES [REFERRED TO]


JUDGEMENT

M.SRINIVASAN,C.J. - (1.)The Tribunal has referred three questions to us for our consideration. One of the questions relates to deduction under Section 36(1)(viii) of the Income -tax Act, 1961. It is covered by our judgment in I.T.R. No. 9 of 1988 The Commissioner of Income Tax, Patiala v. M/s, H.P. Financial Corpn., dated 14 -5 -1997. We have answered the question in that case that the Tribunal was right in law in deciding that the deduction under Section 36(1)(viii) of the Income Tax Act be allowed at the prescribed percentage of the total income computed before making deduction under Chapter VIA and also before taking into account deduction allowable under Section 36(1)(viii) itself. Following the said judgment, we answer the question holding that the Tribunal was right in its view that the deduction under Section 36(1)(viii) of the Act is allowable at the prescribed percentage of the total income before making deduction under Section 36(1)(viii) itself.
(2.)The second question to be considered by us is whether the assessee is entitled to claim the amounts representing discount on bond and debentures as allowable expenditure. In the first year, that is, 1976 -77 the claim was disallowed on the ground that they did not relate to that year. In the second year, the IAC(A) observed that the assessee had itself added back Rs. 19,538/ - on account of discount of bonds in the computation of income. The Tribunal in relation to the year 1977 -78 has deleted this sum but, according to the IAC(A), the decision of the Tribunal has not been accepted by the department. Hence, he added back Rs. 19,538/ - in that year. On appeals, the CIT(A) deleted the disallowance of Rs. 5,702/ - in the first year and Rs. 10,050/ - in the second year. That was challenged by the Revenue. In the third year, that is, 1981 -82, the assessee had debited Rs. 19,538/ - as discount on bonds. While computing the taxable income the assessee itself added back Rs. 9,487/ - as it had been allowed in the year 1977 -78 as a result of appeal effect in that year. For the balance, it had been claimed a deduction.
(3.)The Assessing Authority followed the judgment of the Madras High Court in C.I.T. v. Madras Industrial Investment Corporation Ltd., 124 I.T.R. 454. The assessee relied upon the decision of the Supreme Court in India Cements Ltd., v. Commissioner of Income -tax, Madras, 60 ITR 52, but the Assessing Authority held that the judgment of the Supreme Court was not applicable and followed the Madras case. The CIT (A) upheld the order of the Assessing Authority. On second appeal, the Tribunal rejected the contention of the assessee and accepted the contention of the Revenue.


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