2001 (2) TMI 25 - HC - Income Tax

High Court directs acceptance of notices for Income-tax Commissioner & refers question on deduction disallowance

The High Court of Rajasthan directed Mr. Bhandawat to accept notices for the Commissioner of Income-tax, Jaipur. The Court allowed an application under ... Prima facie adjustment under section 143(1)(a) - disallowance of deduction as prima facie inadmissible - reference of question of law under section 256(2) - whether a factual finding gives rise to a question of lawReference of question of law under section 256(2) - whether a factual finding gives rise to a question of law - Tribunal's refusal to refer the question for the opinion of the High Court was erroneous and the Tribunal was directed to refer a specific question of law. - HELD THAT: - The Court held that the Tribunal's conclusion that no question of law arose because the finding was one of fact was erroneous. The High Court found that the Tribunal's upholding of the Assessing Officer's prima facie adjustment in disallowing the prospecting charges did give rise to a question of law. Consequently the application under section 256(2) was allowed and the Tribunal was directed to refer the specified question of law concerning the prospecting charges payable to the Government of Rajasthan for assessment year 1991-92 to the High Court for its opinion.Application under section 256(2) allowed; Tribunal directed to refer the specified question of law relating to prospecting charges.Prima facie adjustment under section 143(1)(a) - disallowance of deduction as prima facie inadmissible - The question whether expenses for maintenance of the guest-house are allowable was regarded as prima facie inadmissible in view of the specific provision of the Income-tax Act. - HELD THAT: - While the Court found that the prospecting charges gave rise to a question of law warranting reference, it observed separately that the Assessing Officer's treatment of guest-house maintenance expenses as prima facie inadmissible is supported by the specific statutory provision. The Court therefore did not direct a reference on the guest-house expenditure and treated that head as prima facie inadmissible under the Act.Guest-house maintenance expenses are prima facie inadmissible under the relevant provision of the Income-tax Act; no reference directed on that point.Final Conclusion: The application under section 256(2) is allowed; the Tribunal's refusal to refer was held erroneous and it is directed to refer the specified question of law regarding the prospecting charges for AY 1991-92 to the High Court for opinion; guest-house expenses were held prima facie inadmissible; no order as to costs. The High Court of Rajasthan directed Mr. Bhandawat to accept notices for the Commissioner of Income-tax, Jaipur. The Court allowed an application under section 256(2) of the Income-tax Act, 1961, and directed the Tribunal to refer a question of law regarding the disallowance of deduction claimed by the assessee for prospecting charges and guest-house expenses. The Tribunal's rejection of the application under section 256(1) was deemed erroneous, and the Court found that the expenses claimed by the assessee as deductible expenses give rise to a question of law. The Court directed the Tribunal to refer the question of law regarding the adjustment made by disallowing prospecting charges amounting to Rs. 2,96,00,000.