Weighted deduction, surtax deductibility, and section 80J capital employed were all governed by binding precedent against the assessee.

The Court treated three income-tax issues as governed by binding precedent: weighted deduction under section 35B was not available on freight and insurance expenditure; surtax liability for the year was not deductible in computing total income; and, for section 80J capital employed, the written down value of depreciable assets, not original cost, had to be adopted. The reference was disposed of in favour of the Revenue on all questions, and a certificate for appeal to the Supreme Court was granted on the surtax issue. The stated principle was that an issue already concluded by binding precedent must be decided consistently with that earlier view.

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Issues: (i) Whether weighted deduction under section 35B of the Income-tax Act, 1961, could be allowed on freight and insurance expenditure. (ii) Whether surtax liability for the year could be deducted in arriving at total income under the Income-tax Act, 1961. (iii) Whether, for computing capital employed under section 80J of the Income-tax Act, 1961, the written down value of depreciable assets or their original cost should be taken into account.

Issue (i): Whether weighted deduction under section 35B of the Income-tax Act, 1961, could be allowed on freight and insurance expenditure.

Analysis: The issue was held to be covered by an earlier decision of the Court on the scope of weighted deduction under section 35B and its applicability to freight and insurance charges.

Conclusion: The answer was in the affirmative, against the assessee and in favour of the Revenue.

Issue (ii): Whether surtax liability for the year could be deducted in arriving at total income under the Income-tax Act, 1961.

Analysis: The issue was treated as concluded by an earlier decision of the Court holding that surtax liability was not deductible in computing total income under the Act.

Conclusion: The answer was in the affirmative, against the assessee and in favour of the Revenue.

Issue (iii): Whether, for computing capital employed under section 80J of the Income-tax Act, 1961, the written down value of depreciable assets or their original cost should be taken into account.

Analysis: The issue was covered by an earlier decision of the Court and turned on the basis to be adopted for valuing depreciable assets while computing capital employed for section 80J relief.

Conclusion: The answer was in the affirmative, against the assessee and in favour of the Revenue.

Final Conclusion: All the referred questions were answered in favour of the Revenue, and the reference stood disposed of with a certificate granted for appeal to the Supreme Court on the second question.

Ratio Decidendi: Where an issue is already concluded by binding precedent, the same view governs the reference, and for section 80J computation the written down value of depreciable assets is to be adopted rather than original cost.

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