- (1.) HEARD learned counsel for the Revenue on whose behalf this application under Section 256(2) of the Income-tax Act, 1961, has been filed.
(2.) THE respondent-assessee is a manufacturer of edible oil and cattle feed. For the assessment year 1993-94, the average yield of the oil extracted by the assessee from the mustard oil seeds was below 35 per cent. However, because of non-availability of all verifiable facts, the Assessing Officer did not accept the correctness of the result of the oil extraction and taking into consideration a number of facts estimated the percentage yield of oil from mustard oil seeds to be 36 per cent. and he also added estimated interest on interest-free loan advanced to the sister concern. THE relevant facts for the present purposes are that ultimately when the matter reached before the Income-tax Appellate Tribunal, on the appeal filed by the assessee, the Tribunal reduced the estimated yield of the oil from the mustard oil from 36 per cent. to 35 per cent. and deleted the addition made on account of estimated interest on the advance of interest-free loan to the sister concern by accepting the plea of the assessee that the interest-free loan may be advanced to the sister concern out of non-interest-yielding funds lying with the assessee. THE Income-tax Appellate Tribunal during the course of proceedings before it has also granted an application for leading evidence to the assessee. Though the six questions have been framed in different variations said to be arising out of the order of Tribunal pertaining to the aforesaid three spheres of controversy, the Tribunal rejected the application under Section 256(1) by holding that no question of law arises which may be required to be referred to this court for its opinion. This application is under Section 256(2) of the Income-tax Act, 1961, on the ground that the Income-tax Appellate Tribunal was in error in rejecting the application under Section 256(1). The following six questions have been sought to be raised : "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in directing the Assessing Officer to adopt the yield of mustard oil at 35 per cent., without assigning any reasons and in total disregard of material available which upon appraisal they found against the assessee ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in admitting additional evidence in the form of statement of all bags of cotton seed weighing 33,49,703 kgs. in spite of the fact that the Assessing Officer had allowed sufficient opportunity to the assessee to produce/file the same statement before him? (3) Whether, on the facts and in the circumstances of the case, the decision of the Income-tax Appellate Tribunal to delete the entire addition of Rs. 6,12,996 on account of concealed sales of cotton seeds oil and cake is not perverse being unreasonable and contrary to the admitted facts particularly when the difference in the quantity of purchase of cotton seed persisted even after considering the details of such purchase filed before the Income-tax Appellate Tribunal ? (4) Whether, on the facts and in the circumstances of the case, the finding of the Income-tax Appellate Tribunal that addition of Rs. 1,68,955 on account of undervaluation of closing stock is covered by the separate addition on account of low yield of mustard oil, is not perverse being unreasonable and contrary to the material on record inasmuch as the undervaluation of closing stock was on account of low rate of valuation and not on account of quantity of stock ? (5) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in deleting the disallowance of Rs. 2,07,902 on account of expenditure on stores and spares, without giving any reasons as to how the disallowance made by the Assessing Officer was not reasonable and without considering the full facts of the case particularly the facts relating the diversion of stores and spares material to the sister concern ? (6) Whether, on the facts and in the circumstances of the case, the. Income-tax Appellate Tribunal was justified in law in deleting the disallowance of interest of Rs. 51,816 on account of interest-free advance, to the sister concern upheld by the learned Commissioner of Income-tax (Appeals) without considering the material and the case law brought on record by the authorities below ?" As noticed by us above, in fact the six questions replate to the controversy whether the Tribunal was justified in reducing the percentage yield of oil from mustard oil seeds from 36 per cent. to 35 per cent. ; whether the Tribunal was justified in allowing the additional evidence ; and whether the Tribunal was justified in deleting the addition made on account of estimated interest deemed to have been earned by the assessee on the interest-free loan advance made available to the sister concern. Having considered the contentions raised by learned counsel for the applicant, we are of the opinion that none of the three controversies give rise to any issue of law which may require consideration by this court. It is not in dispute that the Income-tax Officer himself has resorted to an estimate percentage yield of the mustard oil by rejecting the correctness of the yield shown by the assessee in his books of account and was not founded on any exactitudes formula. It is clear that in the totality of the circumstances in the perception of the assessing authority 36 per cent. yield was considered to be the reasonable yield of the mustard oil seeds during the year whereas in the perception of the Tribunal the reasonable percentage yield would be 35 per cent. We do not see how any question of law arises in perceiving the reasonable percentage at which the yield of mustard oil can be present in the totality of circumstances. It falls exclusively in the realm of appreciating evidence before the authority and there is bound to be room for some rule of thumb in estimation.
(3.) LIKEWISE, once the Tribunal accepted the plea of the assessee that the interest-free loan was advanced to the sister concern because the assessee was holding unyielding funds, the question of attributing any income to be earned out from such funds on a deemed basis that it must be an expense of business whether the funds utilised for advancing interest-free loan to a sister concern were income yielding or non-yielding assets is a pure question of fact and not governed by any statutory provision. It remains in the realm of appreciation of the totality of circumstances to treat any investment in the interest of and for expediency of their business and whether it has yielded or resulted in depriving its business of its legitimate income. In each case it will depend on appreciation of facts only whether the assessee was justified in diverting funds which could be otherwise utilised for reducing the liability of expenses on the business, thus increasing its profitability or it has utilised its funds without affecting the business profitability. This again in our opinion is a question of appreciating evidence and circumstances attending thereto. It cannot give rise to a question of law. It is not even the contention that in all circumstances where interest-free loan is advanced the estimated interest income must necessarily be included in the income of the assessee. Lastly, the question of allowability of the additional evidence. It is not the say of the petitioner that the Tribunal had no jurisdiction to allow the additional evidence. The only contention raised by learned counsel for the applicant in this connection was that in such event the Tribunal ought to have remanded the case back to the assessing authority for reappreciation of evidence. It is not even suggested that after the assessee was allowed to lead evidence no opportunity was granted to the Revenue for leading any evidence in rebuttal thereof or to explain the same. This also in our opinion does not give rise to any question of law. Whether the appellate authority decides the matter pending before it on the merits after admitting additional evidence itself or remands the case back to the trial court for gathering new material and reappreciation thereof in the light of new material which has come into existence and which has come on record during the pendency of appeal and recording its finding afresh, is a matter of discretion of the appellate forum and not of mandate of law what course is to be adopted. In our opinion no question of law arises from the exercise of discretion by the concerned Tribunal. As a result, this application fails and is hereby dismissed. ;