- (1.) THIS is an appeal filed by the assessee (sic -Revenue) relating to the asst. yr. 1991 -92 for which the accounting year Act. The assessee is a public limited company engaged in the business of paints. The assessee company established new units in Naihati, West Bengal and Sikandrabad, U.P. As regards the Naihati unit, the company made a claim which was refused on two grounds. The first was that the audit report in respect of the unit was filed very late by the assessee and not with the return of income. The Tribunal on such point held that it was not required in case of the company in terms of s. 80 -I(7) of the Act that the audit report has to be filed along with the return and such defect also could be cured. Secondly, the Tribunal after assessing the documents placed before it held in favour of the assessee and stated that the assessee made the apportionment of expenses on different criteria whereas the AO apportioned the expenses wholly on the basis of the turnover. For example, the assessee apportioned the salary of quality control staff, raw materials godown and finished goods godown on the basis of the percentage which the turnover of the net unit bore to the total turnover of account. The salary of the purchase department staff was apportioned, on the basis of the percentage which the raw material consumption of the new unit bore to the total raw material consumption in the paint business. The overhead expenses were apportioned by the assessee on the basis of the turnover. It was found by the Tribunal that the basis adopted by the assessee was more scientific and the AO was not justified in apportioning all the expenses on the basis of the percentage of the turnover. The Revenue Department pointed out that a proper P&L a/c was not furnished by the assessee in respect of the Naihati unit. The Tribunal, however, found that this contention was not accurate. The assessee has furnished a memorandum of P&L a/c which is appearing at p. 26 of the paper book in respect of the unit. The memorandum was also supported by an audit report furnished, in the prescribed form, which was placed at p. 25 of the paper book. The Tribunal also found that the assessee has elaborated its claim by letter dt. 31st Dec, 1993 furnished before the AO which gave the basis of the apportionment as well as the figures concerned. The Tribunal was, therefore, of the view that the assessee's claim could not be resisted. The Tribunal accordingly directed the AO to allow the claim.
(2.) THE matter has been referred by the Department before this Court for opinion on the following questions : "(1) Whether on facts and in the circumstances of the case, the Tribunal was justified in law in holding the method of accounting adopted by the assessee as an acceptable method for the purpose of the IT Act, 1961 and consequently in striking down the AO's action under s. 145(1) ? (2) Whether on facts and in the circumstances of the case, the Tribunal was justified in law in holding that the duty components relatable to closing stock of finished goods constitute a deduction 'otherwise allowable under the IT Act, 1961' for asst. yr. 1991 -92 considering the method of accounting adopted by the assessee, so as to be considered under s. 43B ? (3) Whether on facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 3,72,76,034 ? (4) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law to accept the apportionment of income for the new unit computed by the assessee and thereby deleting the additions under s. 80 -I for Naihati unit -
(3.) DURING the course of argument, Mr. Agarwal appearing on behalf of the Department has specifically submitted that it is not necessary for him to press the question Nos. 1, 2 and 3 in this appeal. He only pressed question No. 4 which has been referred by the Department before us. In view of that, it is not necessary for us to decide those question Nos. 1, 2 and 3. Since, according to Mr. Agarwal, under s. 43B if the amount has been paid actually and the benefit has to be given to the assessee, accordingly, we do not intend to give any answer in respect of question Nos. 1, 2 and 3.;