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High Court Of Calcutta
Satish Chandra, Suhas Chandra Sen
ORGANON (INDIA) LIMITED - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
Income-Tax Reference 240 Of 1981
Decided On : 01/28/1986
Weighted Deduction - Income Tax - The court held that weighted deduction under Section 35b could not be allowed on freight and insurance. Surtax liability could not be deducted in arriving at the total income under the Income-tax Act. The written down value of depreciable assets should be taken into account in computing the capital employed for the purpose of calculating the deduction allowed under Section 80j.
Fact of the Case:
The Tribunal referred questions regarding weighted deduction, surtax liability, and computation of capital employed for deduction under Section 80j of the Income-tax Act, 1961.
Finding of the Court:
The court found in favor of the Department on all three questions based on previous decisions of the court.
Issues: Weighted deduction, surtax liability, computation of capital employed for deduction under Section 80j
Ratio Decidendi: The court relied on previous decisions to answer the questions in favor of the Department.
Final Decision: The court granted a certificate to the assessee for appeal to the Supreme Court in relation to the second question.
( 1 ) IN this case, the Tribunal has referred the following questions for our opinion :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that weighted deduction under Section 35b could not be allowed on freight of Rs. 21,86,115 and insurance of Rs. 76,918 ?
( 2 ) WHETHER, on the facts and in the circumstances of the case and on a proper interpretation of the Income-tax Act, 1961, the Tribunal was right in holding that the surtax liability for the year could not be deducted in arriving at the total income under the Income-tax Act ?
( 3 ) WHETHER, on the facts and in the circumstances of the case and on a correct interpretation of Section 80j of the Income-tax Act, 1961, the Tribunal was right in holding that the written down value of the depreciable assets and not their original cost should be taken into account in computing the capital employed for the purpose of calculating the deduction allowed under the section ?"2. The point raised in the first question is covered by a decision of this court in Bharat General and Textile Industries Ltd. v. CIT [1985] 153 ITR 747. In view of this decision, this question is answered in the affirmative and in favour of the Department. The third question is also covered by the same decision of this court. This question also is answered in the affirmative and in favour of the Department. 3. The second question is concluded by a decision of this court in Molins of India Ltd. v. CIT. We, therefore, answer the second question in the affirmative and in favour of the Department and against the assessee. There will be no order as to costs.
( 4 ) WE are informed that this court has also in ITR No. 202 of 1979 (Molins of India Ltd. v. CIT) dated June 4, 1984, granted a certificate that the case is a fit one for appeal to the Supreme Court in relation to the second question. We, therefore, grant a certificate to the assessee under Section 261 of the Income-tax Act, 1961, that this case is a fit one for appeal to the Supreme Court in relation to the second question.
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