JUDGMENT
R. Jayasimha Babu J.-The assessee has sought reference of a number of questions for the assessment year 1985-86 and for the year 1984-85. The questions proposed for reference by the assessee are as follows :
Relating to the assessment year 1985-86 :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was transfer of shares of Hardillia Chemicals by the applicant to its wholly owned subsidiary during the previous year relevant to the assessment year 1985-86 and capital gains of Rs. 2,06,17,066 is leviable on the assessee ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that for the assessment year 1985-86 the excise duty element included of Rs. 4,49,298 included closing stock of ceramics should not be allowed as a deduction by following the decision of the Gujarat High Court in the case of Lakhanpal National Ltd. v. Income Tax Officer (1986) 162 ITR 240 ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest under section 217(1A) was leviable for the assessment year 1985-86 ?”
Relating to the assessment year 1984-85
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no transfer of shares of Hardillia Chemicals by the applicant to its wholly owned subsidiary, during the previous year relevant to the assessment year 1984-85 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee cannot have a different previous year in respect of share income arising out of transfer of shares ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the excise duty element of Rs. 3,41,808 included in the closing stock of ceramics should not be allowed as a deduction by following the decision of the Gujarat High Court in the case of Lakhanpal National Limited v. Income Tax Officer (1986) 162 ITR 240 ?
4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the closing stock of sugar should be valued .it Rs. 3,959.13 per MT instead of Rs. 3,500 per MT as valued by the appellant t ?
5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the capital loss pertaining to the assessment year 1979-80 cannot be transferred and set off against gains for the assessment year 1984-85
6. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that interest under section 217(1A) was leviable ?”
Relating to the assessment year 1985-86
1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that a jeep constitutes motor car for the purpose of disallowance under section 37(3A) of the Income Tax Act ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the unrealised interest from Government securities is to be included as income of the assessee for the assessment Year 1985-86
For the year 1985-86 the first two questions are, in substance, similar to the question raised for the year 1984-85. These questions, on the facts of the case do not require any reference. The assessee admittedly changed its accounting year for the calendar year to June 30, with effect from August 31, l 983. The assessee was assessed for a period of 18 months up to June 30, 1985. There was no assessment for the assessment year 1987)-84. The assessment was made for the subsequent assessment year 1984-85. The assessee transferred a large number of shares held by it in Hardillia Chemicals Ltd. to what was then its subsidiary. Within two days thereafter, that subsidiary ceased to be the subsidiary of the assessee, the assessee having transferred all its shares in that company to the Duncan Agro group of companies. The assessee claims that the capital gain realised on the sale of shares of the subsidiary, is exempted from tax under section 47A of the Act. That claim would have merited consideration, had section 47A not been in the statute book for the relevant assessment year. Section 47A of the Act was introduced with effect from the beginning of the assessment year 1985-86. The capital gain realised by the assessee from the sale of shares was considered for the assessment year 1985-86 in view of the fact that there was no assessment for the assessment year 1983~84 consequent to the change in the accounting year of the assessee. The assessee at the lime it sought change of the accounting year had not intimated the authorities that in respect of the income from capital gain, no change was effected in the accounting year and the change was in respect of other heads of income only.
The assessee’s claim that in respect of capital gains alone the assessment year should be treated as having remained unchanged as it was permissible under the law to have separate accounting years for different sources of income was rightly rejected by the Tribunal and the authorities below. Reliance placed by counsel for the assessee before us on section 3(4) of’ the Act does not help the assessee’s case as the assessee has not sought permission of the assessing officer, to once again change the accounting .Year in relation to the income under the head “Capital gains”. The change effected at the request of the assessee changing the accounting year from July to June 30, was, therefore, the accounting year in respect of the income under the head “Capital gains” as well. We do not find any substance in the assessee’s claim that these questions are required to be referred to this court. We reject the petition in so far as these questions are concerned.
Question No. 3 proposed for the assessment year 1985-86 as well as Question No. 6 proposed for the assessment year 1984-85, are similar. The Tribunal rejected the assessee’s claim that interest under section 21 7(1A) of the Act was not leviable for the assessment year 1985-86 by holding that the assessee, though aware of the need to file an estimate, in view of the level of the income realised by it during the course of the year, has failed to file that estimate. The fact that it had a carried over loss from an earlier year did not result in disabling to file an estimate. It is not in dispute that after the assessment the assessee was found liable to tax for the assessment year and that no advance tax was paid by the assessee. Interest under section 217(1A) was, therefore, leviable. We do not see any merit in the question raised. We decline to call for a reference of this question.
The other two questions proposed for the assessment year 1985-86 by 11)e assessee also do not merit any reference. The Tribunal in holding that a jeep constitutes a motor car, merely followed a decision of this court. ‘There is no reason to doubt the correctness of the decision. The decision is in Crompton Engineering Co. (Madras) Ltd. v. CIT (1992) 193 ITR 483. The question as to whether the interest unrealised on Government securities should be included in the income of the assessee for the assessment year 1985)-86 has been answered by the Tribunal in the affirmative. The Tribunal has rightly pointed out that the failure on the part of the assessee to collect the interest from the Government, which has issued the security, cannot be regarded as interest unrealisable. The fact that the assessee had lost the certificate did not mean that it could not obtain a duplicate and realise the interest from the Government. The ability of the Government to pay that interest was not a matter to be doubted. The application of the petitioner to refer this question is rejected.
Question No. 2 proposed for the assessment year 1985-86 and question No. 3 proposed for the assessment year 1984-85, in substance, raise the same issue as to whether the excise duty paid by the assessee should be included while valuing the closing stock. The duty paid during the year required to be excluded after having so excluded the amount, prima facie, it would not be proper to include it once again in the value of the closing stock. We are satisfied that the proposed questions warrant reference and we direct the Tribunal to refer question No. 2 as proposed by the assessee for the assessment year 1985-86 and question No. 3 as proposed by the assessee for the year 1984-85.
As regards questions Nos. 4 and 5 for the assessment year 1984-85 proposed by the assessee, we do not see any merit in these questions. Question No. 4 is regarding the valuation of the closing stock at Rs. 3,959.13 per M.T. instead of Rs. 3,500 per M.T. The Tribunal has pointed out that the prices have declined and after considering all the relevant facts held that the sugar stock should be valued at Rs. 3,500 per M.T. and has reduced the value as made by the authorities below by over Rs. 60 lakhs. The question is essentially one of fact.
Question No. 5 is regarding the right of the assessee to carry forward the capital loss pertaining to the assessment year 1979-80 to the assessment year 1984-85. The capital loss could have been carried forward for a period of four assessment years immediately succeeding the assessment year. The assessee was not entitled to the relief. The fact that there was no assessment for the assessment year 1983-84 was on account of the act of the assessee in changing the accounting years. That, however, cannot affect the manner in which the immediately succeeding four assessment years have to be computed. The assessment year 1984-85 being a year beyond four immediately succeeding assessment years, the assessee had no right to carry forward the capital loss to that assessment year.
Though the assessee has proposed a long list of 11 questions only two of them are found to be referable. We direct the Tribunal to refer the following questions :
Relating to the assessment year 1985-86
“2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that for the assessment year 1985-86 the excise duty element included of Rs. 4,49,298 included closing stock of ceramics should not be allowed as a deduction by following the decision of the Gujarat High Court in the case of Lakhanpal National Ltd. v. Income Tax Officer (1986) 162 ITR 240 ?”
Relating to the assessment year 1984-85
“3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the excise duty element of Rs. 3,41,808 included in the closing stock of ceramics should not be allowed as a deduction by following the decision of the Gujarat High Court in the case of Lakhanpal National Ltd. v. Income Tax Officer (1986) 162 ITR 240 ?”
to this court along with the statement of the case and such other materials as are relevant.
All the other questions proposed by the assessee are rejected.
Having regard to the time which had to be spent in considering the questions, which were not ultimately found to be referable, we direct the assessee to pay the costs in the sum of Rs. 1,500 to the revenue .
