Court dismisses income-tax case; obsolescence allowance not maintainable under Income-tax Act.

The court held that the reference application questioning the entitlement to obsolescence allowance for an old kiln was not maintainable under the Income-tax Act provisions. The Appellate Tribunal's order granting obsolescence allowance was not amended by the subsequent rejection of a miscellaneous petition, thus the reference did not arise from the amended order. Additionally, the court ruled that a second question for reference, not part of the original application before the Tribunal, could not be directed for reference to the High Court. Consequently, the court dismissed the income-tax case as both questions were deemed not maintainable for reference.

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Issues:
1. Entitlement to obsolescence allowance for an old kiln for the assessment year 1970-71.
2. Maintainability of the reference application by the Appellate Tribunal for two questions of law.

Analysis:
The case involved a dispute regarding the entitlement to obsolescence allowance for an old kiln for the assessment year 1970-71. The assessee had initially claimed a deduction for kiln building repairs, which was denied by the ITO as capital expenditure. However, the AAC allowed the deduction as current repairs under s. 31(1) of the Income-tax Act. The Appellate Tribunal upheld the ITO's view on capital expenditure but directed the grant of obsolescence allowance under s. 32(1)(iii) for the old kiln. The issue arose when the ITO found that the assessee had not written off the amount in the books, a requirement for claiming obsolescence allowance. The Tribunal rejected a subsequent miscellaneous petition by the revenue, leading to a reference application questioning the entitlement to obsolescence allowance. The Appellate Tribunal rejected the reference application, leading to the present case challenging the maintainability of the reference application.

The primary issue revolved around the interpretation of the provisions of the Income-tax Act, specifically s. 254(1) and (2), concerning the powers of the Appellate Tribunal to pass orders and amend them within a specified period. The Appellate Tribunal's order directing obsolescence allowance was passed under s. 254(1). The subsequent rejection of the miscellaneous petition under s. 254(2) did not amend the original order, rendering the reference application on entitlement to obsolescence allowance not arising from the subsequent order. The court agreed with the Tribunal that the question of law did not arise from the subsequent order, making the reference application not maintainable based on the provisions of the Income-tax Act.

Regarding the second issue of the maintainability of the second question for reference, the court emphasized that the second question was not part of the initial reference application before the Appellate Tribunal. Citing precedent, the court highlighted that the High Court could not direct the Tribunal to refer a question that was not raised before the Tribunal. The court noted that the second question, being unrelated to the original reference application, could not be directed for reference to the High Court. Therefore, the court dismissed the income-tax case, considering both questions, and issues raised therein, as not maintainable for reference.

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