COMMISSIONER OF INCOME TAX-III vs. RIDDHI SIDDHI GLUCO BIOLS LTD

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TAXAP/476/2011HC GujaratGJHC24025272201113 June 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, after hearing the learned senior counsel for the Revenue, agreed with the view taken by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The Court found no substantial question of law arising for its consideration. Specifically, regarding the deletion of the addition of Rs. 39,50,000 on account of disallowance of interest expenses, the Court affirmed the ITAT's finding that the liability had accrued/incurred on the date of acceptance of the agreement and was paid as per Section 43B before the due date of filing the return, thus rendering the disallowance bad in law. The Court also implicitly agreed with the direction concerning the recomputation of Book Profit under Section 115JB, as no contrary view was expressed. The appeal was accordingly dismissed.

What were the facts?

This is a tax appeal filed by the Commissioner of Income Tax-III (the Revenue) against Riddhi Siddhi Gluco Biols Ltd (the assessee). The appeal challenges an order passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals) which deleted an addition of Rs. 39,50,000 made on account of disallowance of interest expenses pertaining to subsequent previous years. The ITAT also directed the Assessing Officer not to include pre-operative interest expenses and prior period expenses while recomputing the Book Profit under Section 115JB. The Revenue has presented proposed questions of law for the High Court's consideration.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 39,50,000 made on account of disallowance of interest expenses pertaining to subsequent previous years? (Question of law and fact, concerning Section 43B of the Income Tax Act). 2. Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer not to include pre-operative interest expenses and prior period expenses while recomputing the Book Profit under Section 115JB? (Question of law and fact, concerning Section 115JB of the Income Tax Act). Assessee's Contentions: The judgment does not record any specific contentions made by the assessee. However, it notes that the Commissioner of Income Tax (Appeals) allowed the assessee's appeal relying on the decision of the Apex Court in Calcutta Discount Co. Ltd. vs. CIT. The ITAT confirmed this, holding that the liability accrued/incurred on the date of acceptance of the agreement and was paid before the due date of filing the return, making the disallowance of Rs. 39.50 lacs bad in law. Revenue's Contentions: The Revenue has filed the tax appeal presenting the proposed questions of law. The judgment records that Mr. M. R. Bhatt, learned senior counsel for the revenue, was heard.

Which sections of the Income-tax Act were involved?

Section 43B,Section 115JB

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
TAXAP/476/2011 1/2 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 476 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the  judgment?    No 2 To be referred to the Reporter or not?    No 3 Whether their Lordships wish  to see the  fair copy of the  judgment?    No 4 Whether this case involves a substantial question of law as to  the interpretation of the constitution of India, 1950 or any  order made thereunder?    No 5 Whether it is to be circulated to the civil judge?    No ========================================================= COMMISSIONER OF INCOME TAX-III - Appellant(s) Versus RIDDHI SIDDHI GLUCO BIOLS LTD - Opponent(s) ========================================================= Appearance : MR MR BHATT FOR MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 13/06/2012

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI)

1.

0 We have heard Mr. M. R.Bhatt, learned senior counsel for the revenue in this tax appeal.

TAXAP/476/2011 2/2 JUDGMENT

2.

0 This   tax   appeal   has   been   filed   on   the   following   proposed questions. “[A] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.39,50,000/­ made on account of disallowance of interest expenses pertaining to subsequent previous years? [B]   Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer not to include the pre­operative interest expenses and prior period expenses while recomputing the Book Profit under section 115JB?” 3.0 been accrued/incurred on the date of acceptance of agreement and its payment has been made as per section 43B of the Act before the due date   of   filing   of   return   of   income.   Therefore,   the   disallowance   of Rs.39.50 lacs is bad in law. The Commissioner of Income Tax (Appeal) as well   as   Income   Tax   Appellate   Tribunal   have   rightly   deleted   the disallowance.

4.

0 We   are   in   agreement   with   the   view   taken   by   aforesaid   two authorities. We do not find any substantial question of law arises for consideration of this Court. This tax appeal is accordingly dismissed. [V. M. SAHAI, J.] [N. V. ANJARIA, J.] Amit

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