2006 (4) TMI 98 - HC - Income Tax

Tribunal Decision Affirmed: Investment & Shift Allowances, Sales Tax, Electricity Charges, Expense Disallowance

The Court upheld the Tribunal's decision on investment allowance for switchboards and electric machinery, allowed extra shift allowances calculation, ... - Issues involved: The judgment addresses various questions of law referred by the Income-tax Appellate Tribunal regarding investment allowance, extra shift allowances, deduction of sales tax liability, disputed liability for electricity charges, and disallowance of expenses.Investment Allowance (Question 1): The Tribunal allowed the assessee's claim for investment allowance on outgoing switchboards and electric machinery, considering them as part of plant and machinery. Citing a judgment from the Gujarat High Court, the Court upheld the Tribunal's decision, stating that investment allowance is available on such items which are integral to plant and machinery.Extra Shift Allowances (Question 2): The matter was remitted back to the Income-tax Officer for calculating extra shift allowances on the entire machinery. The Court referred to Supreme Court judgments and directed calculations to be made in accordance with the Tribunal's directions and binding precedents.Deduction of Sales Tax Liability (Question 3): The deduction of Rs. 33,996 was not allowed towards sales tax liability but as a business loss. The Court clarified that the amount had to be paid as the firm adjusted the assessee's credit balance. As the question was found to be inaccurately framed, it was returned unanswered.Disputed Liability for Electricity Charges (Question 4): Relying on a Supreme Court judgment, the Court held in favor of the assessee, stating that the liability for electricity charges accrued during the relevant year as per the mercantile system followed by the assessee.Disallowance of Expenses (Question 5): The Court found that the assessee's claim of Rs. 12,000 was allowed without proof. Despite this, due to the small amount involved and the assessment year being 1981-82, the Court decided not to give effect to this finding, following previous court observations.The judgment concludes by disposing of the reference accordingly.