ASST. COMMISSIONER OF INCOME TAX vs. SAYAJI IRON WORKD(CONTRACT)LTD

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TAXAP/465/1999HC GujaratGJHC24025795199911 November 2008Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE SMT. JUSTICE ABHILASHA KUMARI3 pages

AI SummaryAllowed

What did the High Court hold?

The High Court answered the substantial question of law in the negative, in favour of the Revenue and against the respondent-assessee. The Court relied on its earlier judgments in Income Tax Reference No. 81 of 1991 and cognate matters, decided by a common judgment dated October 16, 2001, and also referred to a judgment dated November 7, 2001, in ITR No. 274 of 1994. The reasoning was that the issue had been concluded by these prior decisions of the High Court. The operative direction was to allow the appeal in the aforesaid terms, with no order as to costs. No issue was expressly left undecided.

What were the facts?

The Assistant Commissioner of Income Tax (Appellant) filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT). The assessment year(s) are not explicitly stated. The ITAT had held that Section 40A(8) of the Income Tax Act was not applicable to interest paid to directors, shareholders, and their relatives on their current accounts. The appeal was admitted on December 6, 2000, and a substantial question of law was formulated. The respondent-assessee did not appear before the High Court. The High Court noted that a similar question had been decided in favour of the Revenue in earlier judgments between the same parties.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the provisions of section 40A(8) of the Income Tax Act are not applicable in respect of interest paid to directors, shareholders and their relatives on their current accounts? The Appellant (Revenue) contended that the High Court had previously decided an identically worded question in favour of the Revenue, referring to earlier decisions. The Respondent (Assessee) did not present any arguments before the High Court.

Which sections of the Income-tax Act were involved?

40A(8)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

TAXAP/46519/1999 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 465 of 1999 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- HON'BLE SMT. JUSTICE ABHILASHA KUMARI Sd/- ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 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 ? 5 Whether it is to be circulated to the civil judge ? ========================================================= ASST. COMMISSIONER OF INCOME TAX - Appellant(s) Versus SAYAJI IRON WORKD(CONTRACT)LTD - Opponent(s) ========================================================= Appearance : MR KM PARIKH for Appellant(s) : 1, NOTICE SERVED for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HON'BLE SMT. JUSTICE ABHILASHA KUMARI Date : 11/11/2008

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1

The Appeal has been admitted vide order dated 6.12.2000 and the following substantial question of TAXAP/46519/1999 2/3 JUDGMENT law was formulated at the time of admission. “Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the provisions of section 40A(8) of the Income Tax Act are not applicable in respect of interest paid to directors, share holders and their relatives on their current accounts?” 2 Though served none appears on behalf of the respondent-assessee. Heard learned Counsel for the Appellant. It is pointed out that in Income Tax Reference No. 81 of 1991 and cognate matters vide common judgment dated 16.10.2001 rendered between the same parties, this Court has answered identically worded question in favour of Revenue by referring to earlier decisions. 3 In light of the fact that the issue stands concluded by the earlier judgments of this Court, it is not necessary to set out facts and contentions in detail. For the reasons stated in judgment dated 16.10.2001 as referred to here-in-before as well as judgment dated 7.11.2001 in ITR No. 274 of 1994, the TAXAP/46519/1999 3/3 JUDGMENT question as referred to above is answered in the Negative i.e. in favour of the Revenue and against the respondent-assessee. 4

The Appeal is accordingly allowed in the aforesaid terms with no order as to costs. (D.A. Mehta, J.) (Smt. Abhilasha Kumari, J.) M.M.BHATT

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