Dipak Kumar Sen, J. - (1.) On an application of the assessee under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions, as questions of law arising out of its order, for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the excess payments of Rs. 6,34,484 and Rs. 42,284 made on account of fluctuations in the exchange rate of dollars, at the time of repayment of the dollar loan raised from EXIM Bank and ICICI, respectively, for purchasing machinery from abroad was a capital expenditure and not an allowable revenue expenditure ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal ought to have held that the excess payments on account of fluctuations in the exchange rate of dollars for repayment of dollar loan should have been allowed as revenue expense since the payment under consideration had been incurred as an integral part of the profit-earning process and did not bring into existence any asset or right of a permanent character ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal ought to have held alternatively that the exce'ss payments of Rs. 6,34,484 and Rs. 42,284 was a business loss under Section 28(i) ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in drawing a distinction between the expenditure incurred in obtaining a loan and the expenditure incurred at the time of repayment of the loan for determining the deductibility of the expenses incurred in relation to either activity ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the expenditure incurred for repaying the loan in foreign currency would be allowable as revenue expenditure only if the loan in foreign currency was utilised for acquiring current assets ?"
(2.) On another application of the Revenue also under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions, as questions of law arising out of its order, for the opinion of this court : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the house rent allowance and reimbursement of medical expenses paid by the assessee-company to its employees are not perquisites within the meaning of Section 40A(5)(a)(ii) of the Income-tax Act, 1961? (2) Whether, on the facts and in the circumstances of the case and on a correct interpretation of Section 40(c) of the Income-tax Act, the Tribunal was justified in holding that the commission paid to the directors should be excluded for the purpose of working out the disallowance under Section 40(c) of the Income-tax Act ? (3) Whether, on the facts and in the circumstances of the case and having regard to the fact that the assessee-company itself included commission paid to its directors for the purpose of disallowance under Section 40(c) of the Income-tax Act, the Tribunal was justified in upholding the decision of the Commissioner of Income-tax (Appeals) in entertaining the ground of appeal of the assessee claiming exclusion of commission for working out the disallowance under Section 40(c) of the Income-tax Act ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the Deep Sea Fishing Division of the assessee was an 'industrial undertaking' within the meaning of Sections 80J of the Income-tax Act, 1961 ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the expenses on account of export agency inspection fee are covered by Section 35B of the Income-tax Act and in that view, such expenses are entitled to weighted deduction ? (6) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the value of capital work-in-progress in its industrial undertaking, agricultural pesticide division, should be included in the computation of capital employed for the purpose of relief under Section 80J of the Income-tax Act ? (7) Whether, on the facts and in the circumstances of the case and having regard to the fact that the agricultural pesticide division of the assessee worked for four months only during the assessment year 1978-79, the Tribunal was justified in holding that the deduction under Section 80J of the Income-tax Act should be allowed for the entire period instead of on a pro rata basis ?"
(3.) The Tribunal has sent up a consolidated statement of case in respect of all the questions. The controversy raised in question No. 1 referred at the instance of the assessee is covered by a decision of this court in CIT v. Bharat General & Textile Industries Ltd. [1986] 157 ITR 158 as also an earlier decision of this court in Bestobell (India) Ltd. v. CIT [1979] 117 ITR 789. Following the said decisions, we answer the question in the negative and in favour of the Revenue.;