COMMISSIONER OF INCOME TAX vs. THE A'BAD MFG. & CALICO PRIN- TING CO. LTD.

ITR/78/1996HC GujaratGJHC24021758199629 January 2008Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MR. JUSTICE Z.K.SAIYED3 pages
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What were the facts?

The Income Tax Appellate Tribunal, Ahmedabad Bench – C, referred two questions of law to the High Court of Gujarat at Ahmedabad at the instance of the Revenue. The assessment year in question is 1977-78, with the relevant accounting period ending on March 31, 1977. The respondent-assessee, The A'bad Mfg. & Calico Printing Co. Ltd., was served but did not appear before the High Court. The Commissioner of Income Tax is the applicant (Revenue). The first question pertains to the admissibility of salary and wages payable under an award amounting to Rs. 20,10,000, which was neither paid nor debited in the accounts. The second question concerns the deduction claimed under Section 80-J on the amount of work in progress.

What did the High Court hold?

The High Court answered both referred questions in the affirmative, in favour of the assessee and against the Revenue. For the first question, the Court followed its own previous decision in the assessee's own case reported in (2000) 244 ITR 156. This implies that the Tribunal's finding that the salary and wages payable under the award, despite not being paid or debited, was an admissible deduction was upheld. For the second question, the Court relied on the Apex Court's judgment in Commissioner of Income Tax vs. Alocock Ashdown & Co. Ltd. (1997) 224 ITR 352, which presumably supported the assessee's claim for deduction under Section 80-J on the amount of work in progress. The reference was disposed of accordingly, with no order as to costs. No issues were expressly left undecided.

What were the issues?

The Tribunal had to decide two questions of law referred by the Revenue: 1. Whether, the Appellate Tribunal is right in law and on facts in holding that salary and wages payable under the award amounting to Rs. 20,10,000/- is an admissible deduction, though the said amount was neither paid to the employees nor it was debited in the accounts? (Question of law and fact, concerning admissibility of deduction). 2. Whether, the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to allow the deduction claimed under Section 80-J of the Act on the amount of work in progress? (Question of law and fact, concerning deduction under Section 80-J). The Revenue, through its learned Senior Standing Counsel, relied on the High Court's decision in the assessee's own case reported in (2000) 244 ITR 156 for the first question. For the second question, the Revenue referred to the Apex Court's judgment in Commissioner of Income Tax vs. Alocock Ashdown & Co. Ltd., reported in (1997) 224 ITR 352. The assessee did not present any arguments as there was no appearance on their behalf.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 80-J

AI-generated summary — verify with the full judgment below

ITR/78/1996 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 78 of 1996 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MR.JUSTICE Z.K.SAIYED ========================================================= 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 ? ========================================================= COMMISSIONER OF INCOME TAX - Applicant(s) Versus THE A'BAD MFG. & CALICO PRIN- TING CO. LTD. - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, SERVED BY RPAD - (N) for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE Z.K.SAIYED Date : 29/01/2008

ITR/78/1996 2/3 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUST

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