SUPREME COURT OF INDIA

Before:- S.P. Bharucha, V.N. Khare and N. Santosh Hegde, JJ.

Civil Appeal Nos. 1650-51 of 1994 with C.A. Nos. 4573 of 1998 and 2385-86 of 1994. D/d. 23.2.1999.

C.I.T., Gujarat-III - Appellant

Versus

Cadila Chemicals - Respondent

Income-tax Act, 1961, Section 256 - Reference to High Court - Question of law - Payment of premium for puchasing deferred annuity policies of two Managing Directors - Tribunal deleting additions under Section 40 - A(5) of the Act therefor - High Court taking the view that issue stood settled by the Supreme Court in Commissioner Income Tax v. LW Russel (1964) 53 ITR 91 (AIR 1965 Supreme Court 49) - Held, that questions are questions of law and their consideration by the High Court is requisite - Tribunal is directed to draw up statement of cases therefor.

[Paras 3 and 4]

Cases Referred :-

Commissioner of Income-tax v. L.W. Russel, (1964)53 ITR 91.

Gujarat Steel Tubes v. Commissioner of Income-tax, (210 ITR 358).

JUDGMENT

The questions raised in these three appeals, relating to three different sets of assessment years, are common. They read thus :

"(1) Whether the Tribunal is right in law and on facts in deleting the addition under Section 40A(5) of the Income Tax Act, 1961 in respect of premium paid for the purchase of deferred annuity policies in respect of two Managing Directors ?

(ii) Whether the appellate Tribunal is right in distinguishing the decision of the Gujarat Steel Tube (P) Ltd., (1994)115 CTR 82 ?"

2. It is difficult to understand why the Tribunal declined to refer these questions to the High Court. The High Court took the view that they need not be referred because the issue was settled by the decision of the Supreme Court in Commissioner of Income-tax v. L.W. Russel, (1964)53 ITR 91.

3. Learned counsel for the appellant-Revenue submitted that the decision in Russel's case aforementioned concluded the matter in so far as it related to the employee while the present proceedings related to the availability of the deduction in so far as the employer was concerned. He also submitted that the Gujarat High Court, in a matter relating to the employer, Gujarat Steel Tubes v. Commissioner of Income-tax, (210 ITR 358), had taken a view which favoured the Revenue. There was, therefore, a question of law to be considered and the High Court ought to have called upon the Tribunal to refer the questions to it for determination. Learned counsel for the assessee, fairly, did not dispute that, in any event, questions of law arose which required determination by the High Court.

4. We make it clear that we do not express any view on the questions but, clearly, the questions are questions of law and their consideration by the High Court is requisite.

5. The appeals are allowed. The orders under appeal are set aside. The applications made by the Revenue under Section 256(2) of the Income Tax Act are allowed. The Tribunal is directed to refer the questions to the High Court for consideration, having drawn up the requisite statement of cases. No order as to costs.

Appeals allowed.