ORDER
S. S. MEHRA, J.M. :
Applicant-Revenue by their present reference applications under S. 256(1) of the IT Act, 1961, both presented on 19th October, 1992, request the Tribunal to refer, for the esteemed opinion of the Honble J&K High Court, questions mentioned hereinafter, said to be referable questions of law and further stated to be arising out of the consolidated order dt. 31st July, 1992 of Chandigarh Bench, Camp Jammu, of the Tribunal in ITA No. 757/Asr/1987 for the asst. yr. 1984-85 :
Question for RA No. 176/1992 – Asst. yr. 1981-82
(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Assessing Officer to allow investment allowance of the assessee ?
(ii) Whether, the Tribunal has not made perverse application of the facts of the case when it held that the issue involved is debatable whereas the Assessing Officer had recorded it as a matter of fact that the assessee had produced no ice during the accounting period relevant to the assessment year under consideration ?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal has not failed to appreciate that the Assessing Officer had made the addition by rejecting the claim of the assessee under S. 32A(2A) (that the assessee) was mainly engaged in the production of alcoholic drinks which was in (an) item listed in the Eleventh Schedule and not in the production of an item not listed in the said schedule which could earn or the assessee that deduction under S. 32A of the IT Act, 1961 ?”
Question for RA No. 179/Asr/1991 – Asst. yr. 1984-85
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the deletion of addition of Rs. 8,93,827 made by the Assessing Officer under S. 40A(3) of the IT Act, 1961 ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there existed exceptional and unavoidable circumstances necessitating the payment in cash whereas the fact is it is practice with the assessee to make payment in cash to the sellers of empty bottles with whom the assessee has a long business dealing ?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal has not failed to appreciate that the assessee has never proved before the Assessing Officer that the payments in cash were made due to unavoidable and exceptional circumstances ?
(iv) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the deletion of addition of Rs. 61,431 made by the Assessing Officer under S. 37(3A) of the IT Act, 1961 ?
(v) Whether, on the facts and in the circumstances of the case, the Tribunal has not failed to appreciate that the expenses which were restricted under S. 37(3A) of the IT Act, 1961, were of such a nature as could help promote the sales of the assessee and thus fell within the meaning and scope of S. 37(3A) of the IT Act, 1961 ?”
2. For the sake of convenience, both the reference applications are consolidated for being disposed of by single order.
3. To start with, we take up Revenues RA No. 176/1992 for the asst. yr. 1981-82. The solitary issue raised in all the three questions is in respect of the assessees claim for investment allowance. Assessees such claim was not negatived at the time of framing assessment. The Assessing Officer subsequently assumed jurisdiction to pass rectificatory order under S. 154 of the Act to withdraw the investment allowance earlier made to the assessee. In fact, such order was passed and the relief allowed was withdrawn.
4. Such action of the Assessing Officer was contested by the assessee and the learned first appellate authority confirmed such rectificatory order.
5. Thereafter the assessee brought the matter before the Bench and its appeal got allowed with the following observations :
“2. The fact remains and the order under S. 154 also proves that it is “……… during the year …… manufacturing ice was started”. With the above feedback of the case, after the completion of assessment, investment allowance could not be withdrawn in an action under S. 154 of the Act since whether or not the ice was beings manufactured and whether or not the plant and machinery on which plant and machinery (investment allowance) was allowed was being used for the purpose required further probing into factual position. The issue became debatable and in view of the decision of the Honble Supreme Court, reported as (1971) 82 ITR 50 (SC), S. 154 of the Act could not be invoked. We hold accordingly. The impugned order gets cancelled and the assessee succeeds in its appeal.”
6. In the light of preceding paragraph that the Tribunal recorded findings after appreciating the facts placed on records in respect of the controversy. From such appreciation of facts and position, in our view, no referable question of law arises. We thus are of the view that no referable question of law arises from the said order of the Tribunal and thus decline to make reference.
7. The reference application is rejected.
8. Next, we take up the Revenues RA No. 179/Asr/1992 for the asst. yr. 1984-85. In five questions, the applicant has raised two issues. Question Nos. 1 to 3 deal with the issue under S. 40A(3) of the Act. Question Nos. 4 and 5 deal with an issue under S. 37(3A) of the Act.
9. The Assessing Officer made addition under S. 40A(3) of the Act, which was deleted by the learned first appellate authority. The matter was thereafter brought by the Revenue before the Tribunal and the Bench refused to interfere with the following observations :
“6. Coming to ground No. 1, to say the least, the assessee buys the empty bottles from Kabaris and from paddlers/hawkers who collect it as is generally seen daily from houses, streets and bazars. On these facts, we cannot say that S. 40A(3) of the Act applied. Whether or not the payment has been made, which falls within the mischief of S. 40A(3) of the Act, we do hold that in terms of statutory r. 6DD, which deals with the topic, “cases and circumstances in which payment in a sum exceeding Rs. 2,500 may be made otherwise than by a cross (crossed) cheque drawn on a bank or by a cross (crossed) bank draft”, the payments were hit not by S. 40A(3) of the Act but did fall within the ambit of the said rule, hence, specific mention is made of cl. (j). We do hold that there were exceptional and unavoidable circumstances and the payment on the facts and in the circumstances of the case, was not to be made in terms of S. 40A(3) because it was not practicable. Impossibility is a good argument in law. We hold accordingly. The Revenue fails.”
10. Revenues first three questions are in this respect. After hearing the submissions and having carefully perused the Tribunals order, we are satisfied that the finding was recorded by the Bench after appreciating the facts found by the Bench and from such situation, in our view, no referable question or law arises for making reference. We thus see no necessity of justification for making reference of any of the first three questions.
11. Question Nos. 4 and 5 are in respect of action under S. 37(3A) of the Act. The Department raised a ground before (against) the findings of the learned first appellate authority and the Bench refused to interfere with the following observations :
“5. In ground No. 3, the Revenue contends that S. 37(3A) of the Act should have been applied vis-a-vis expenditure debited under the head of accounts, rebate on sales, sales commission, car hire charges, etc. Nothing is covered under the above sections since it falls outside the mischief of S. 37(3A). The finding of the learned first appellate authority on the issue merits no interference.”
12. After carefully having gone through the facts and the Benchs findings, we are satisfied that no referable question of law arises from that part of the Tribunals order. We thus decline to make one.
13. In the result, both the reference applications are rejected.