ORDER SHEET ITA 548/2004 IN HIGH COURT AT CALCUTTA Special Jurisdiction(income tax) ORIGINAL SIDE C. I. T. KOLKATA - II Versus KESORAM INDUSTRIES LTD. BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 24th March, 2015. Mr. M. Nizamuddin, Adv., for appellant. Mr. R.N. Bajoria, Sr. Adv., with Mr. Akhilesh Gupta, Adv., for respondent. Court : subject matter of challenge in this appeal is judgment and order dated 25th March, 2004 pertaining to assessment year 1984-85. revenue has come up in appeal. following questions have been proposed: (a) Whether on facts and in circumstances of case, learned Tribunal was right in granting investment allowance of Rs.57,06,061/-, thereby vacating order passed by Commissioner of Income Tax under section 263 of Act? (b) Whether on facts and in circumstances of case, order of learned Tribunal is perverse in eye of law? learned Tribunal, in setting aside order passed by CIT under section 263 with regard to disallowance of investment allowance, held that 2 machineries acquired by assessee had already been put to use. cement factory may not have commenced production of cement, but before cement can be produced, raw material is required which is limestone in this case, which has to be quarried. machineries purchased were for purpose of quarrying limestone and those machineries were put to use. Limestone weighing 7844.88 MTs had already been produced by way of quarrying wherein machineries were used. Therefore, assessee was not only entitled to investment allowance but also to depreciation. learned Tribunal, in circumstances, was of opinion that view taken by assessing officer was possible view. Therefore, exercise of power under section 263 was incompetent. Mr. Nizamuddin, learned Advocate appearing for revenue, has not disputed factual basis indicated above. If factual basis is not in dispute, then conclusion arrived at by Tribunal cannot also be erroneous. Therefore, first question is answered in affirmative. In so far as second question is concerned, question for consideration was whether brokerage and commission paid by assessee can be disallowed partly as required by sub-sections (3A) and (3B) of section 37 as they were at relevant point of time. Sub-section (3A) provided for disallowing 20% of expenditure; sub-section (3B) provided that expenditure incurred on account of sale promotion would be within mischief of sub- section (3A). learned Tribunal, in setting aside order of CIT under section 263, relied upon judgment of this Court in case of CIT vs- Statesman Ltd., reported in (1992) 198 ITRE 582, wherein following view was taken: Held, on facts of case, that expenditure of Rs.1,57,65,878 and Rs.1,53,88,521 incurred as and by way of commission paid to sales agents and advertisement agents, respectively, did not attract disallowance under sub-section (3A) and sub-section (3B) of section 37. 3 Mr. Nizamuddin submitted that this judgment was not before CIT when it exercised its power although learned Tribunal has passed order after taking into consideration aforesaid judgment of this Court. Therefore, issue raised is covered by judgment of this Court. Accordingly, second question is also answered in affirmative. appeal is thus admitted and disposed of against revenue. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) tk C. I. T. Kolkata-II v. Kesoram Industries Ltd