Ajay Kumar Mittal, J. - (1.) At the instance of the revenue, the following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Delhi Bench, Delhi (in short, "the Tribunal') for the assessment year 1995 -96 arising out of its order dated 22.5.1998, Annexure 'C' passed in ITA No. 5370 (Del) of 1987: - "Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in disallowing the adjustments of interest payable to IFCI and sales tax penalty made by the Assessing Officer under Sec. 43B of the Income Tax Act, 1961 while processing the case under Sec. 143(1)(a) as not being prima facie adjustments -
(2.) A few facts relevant for the decision of the controversy involved as available on the record of the case may be noticed. The assessee company filed its return of income for the assessment year in question on 30.11.1995 declaring nil income. The total income of the assessee before setting off the unabsorbed depreciation was Rs. 1,16,48,477/ -. The unabsorbed deprecation was Rs. 1,43,96,287/ -. The total income was set off against the unabsorbed depreciation and accordingly the total income was reduced to nil. The return was processed by the Assessing Officer under Sec. 143(1)(a) of the Act. The Assessing Officer was of the view that the interest amount and the sales tax recoverable was not allowable as deduction and accordingly, he made prima facie adjustment as under: - The above adjustments were made in the intimation dated 4.11.1996. The assessee filed appeal against this intimation before the Commissioner of Income Tax (Appeals) [CIT(A)] which was dismissed vide order dated 17.9.1997. On further appeal before the Tribunal by the assessee, it was held that such adjustments were beyond the scope of Sec. 143(1)(a) of he Act. Accordingly, the adjustments made by the Assessing Officer were deleted and the appeal of the assessee was allowed vide order dated 22.5.1998. The application filed by the revenue for reference under Sec. 256(1) of the Act for the opinion of this Court on the aforesaid question of law arising out of order dated 22.5.1998, was rejected by the Tribunal vide order dated 19.3.1999. Subsequently, this court under Sec. 256(2) of the Act had directed the Tribunal to refer the question of law to it for its opinion. Hence the instant reference at the instance of the revenue.
(3.) We have heard learned counsel for the parties.;