- (1.) BY this reference under Section 256(1) of the Income Tax Act, 1961, the following question has been referred to this Court: Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in law in directing not to withdraw the Investment Allowance already granted as wrongly allowed to the assessee firm as per the provision contained in subsection C of Section 155(4A) of the IT Act, 1961?
(2.) WITHOUT going into the circular referred to by the learned Counsel appearing on behalf of the parties with regard to the monetary limit within which the matter may not be referred to this Court for adjudication, we have heard the learned Counsel for the parties on the merits of the case. Brief facts of the case is that the assessing officer finding that the investment allowance of Rs. 2,52,143/ - had been transferred to the partners' Capital Account in the assessment year 1986 -87, proceeded under Section 155(4A) of the Act and passed an order to withdraw the investment allowance thereby making addition of the aforesaid amount to the assessee firm under loss originally assessed. Aggrieved by the said order passed by the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The CIT (Appeals) differed with the findings arrived at by the assessing officer and allowed the appeal preferred by the assessee against which the Department preferred a Second appeal before the Income Tax Appellate Tribunal at Patna. The Tribunal after considering the facts of the case affirmed the view taken by the CIT (Appeals) and dismissed the appeal filed by the Department. The Relevant finding of the Tribunal is quoted herein below: We have heard the rival submissions when the same arguments have been reiterated. The learned Counsel for the assessee has also taken us through a written reply filed before the AO in response to the show cause notice. It was admitted therein that the assessee had wrongly transferred the investment allowance Reserve amounting to Rs. 2,52,143/ - to the Partners' Capital Account, but this was only a mistake in presentation of figures. Each of the Partners' capital account had been credited by a sum of Rs, 63,035.75 and the credit balance had never gone below this figure. In the circumstances, we find merit in the contention of the learned Counsel that the amount was not utilized for any other purpose, It has further been pointed out that the assessee had purchased plant and machinery worth Rs, 4,03,692/ - during the A.Y. 1989 -90 thereby utilizing the entire amount of Reserve created in A.Y. 1986 -87. We also find that in case of CIT v. Ganges . 131 ITR 404 the assessee company transferred a sum from the Development Rebate Reserve to the General Reserve and from General Reserve to the Profit & Loss Appropriation Account for declaration of dividends and the General Reserve was sufficient for the payment of dividend even without transferring from the Development Rebate Reserve. It was held that the Development Rebate Reserve was not utilized for distribution as dividend. Following with respect the ratio of the above decision, we hold that the investment allowance reserve was not utilized for any other purpose, since the credit balance in the Partners' Capital Account did not go below Rs. 63,035.75. Further the amount was finally used for purchases of plant and machinery in A.Y. 1989 -90. In the facts and circumstances of the case, we are in agreement with the decision of the CIT (A) and decline to interfere with it. The Department's contention is rejected.
(3.) FROM perusal of the aforesaid finding by the tribunal, it is clear that there was some dispute with regard to the mentioning of the investment allowance in a particular head. The tribunal found that the transfer of the investment allowance to the Partners' Capital Account was a mistake and the said credit balance was never utilized for any other purpose. The tribunal further found that the assessee had purchased plant and machinery during the relevant assessment year by utilizing the entire amount of reserve credit. Having regard to the findings of fact arrived at by the CIT (Appeal) and the tribunal, we do not find any reason to answer the Reference in as much as in the facts of the case, the answer that may be given may not be of any purpose in view of the findings recorded by the two authorities. This Reference therefore stands disposed of.;