COMMISSIONER OF INCOME TAX Vs. INDO CARPET FACTORY SRINAGAR

JUDGEMENT

(1.) By this reference under section 256(1) of the Income-tax Act, 1961 ("Act"), the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar ("Tribunal") has referred the following two questions of law to this Court for opinion at the instance of the revenue :

(2.) This reference pertains to assessment year 1978-79. The assessee is a registered firm engaged in the business of manufacture, purchase and sale of carpets. The assessee also exports carpets outside the country. The head office of the assessee is at Srinagar. It has also a branch at Delhi. By this reference the Tribunal has referred two questions of law to this Court for opinion. The controversy in the first question pertains to the right of appeal under section 246(1)(c) of the Act against charge of interest under section 139(8) and section 217 of the Act. The Tribunal has held that the assessee can also challenge the leviability and quantum of interest charged under section 139(8) and section 217 of the Act. Aggrieved by the decision of the Tribunal, the revenue applied for reference of question No.1 to this Court for opinion which the Tribunal has done. The controversy in the second question pertains to allowability of weighted deduction in respect of certain items of expenditure. The Tribunal has allowed weighted deduction to the assessee in respect of the following items of expenditure:

(3.) So far as the first question is concerned, the controversy raised therein now stands concluded by ratio of the decision of the Supreme Court in Central Provinces Maganese Ore Co. Ltd. v. CIT (1986) 160 ITR 961. In that case the question before the Supreme Court was whether orders levying interest under sub-section (8) of section 139 and under section 215 are appealable under section 246 of the Income-tax Act, 1961. The Supreme Court held: