COMM. OF INCOME TAX vs. PALLAVI MAYOR T. NO. 18

ITR/46/2000HC GujaratGJHC24022405200012 December 2007Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE Z.K.SAIYED3 pages
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What were the facts?

This case involves an Income Tax Reference No. 46 of 2000 before the High Court of Gujarat at Ahmedabad. The applicant is the Commissioner of Income Tax, and the respondent is Pallavi Mayor T. No. 18. The reference was made at the instance of the revenue by the Income Tax Appellate Tribunal, Ahmedabad Bench "A", under Section 256(2) of the Income-tax Act, 1961. The High Court heard arguments from both the revenue and the respondent. The Court noted that the facts did not require extensive discussion as the questions referred were no longer res integra.

What did the High Court hold?

The High Court, in respectful agreement with the ratio of the judgment in COMMISSIONER OF INCOME-TAX Vs UPNISHAD INVESTMENT PVT. LTD. AND ORS reported in [2003] 260 ITR 532, answered the referred questions. The first question was answered in the negative, meaning the interest on debentures issued by companies other than those specified is indeed liable to be computed as income under the head "interest" on securities, which is in favour of the revenue and against the assessee. The second question was answered in the affirmative, meaning interest on debentures is to be considered income when it has become due, not necessarily when it is received, which is in favour of the assessee and against the revenue. The reference was disposed of with no order as to costs.

What were the issues?

The Tribunal referred two questions of law for the High Court's opinion: 1. Whether, in the facts and circumstances of the case, the Appellate Tribunal is right in law that the interest on debentures issued by companies other than a local authority, company, or corporation established by a central, State, or Provincial Act is not liable to be computed as income under the head "interest" on securities? (Question of law concerning the head of income under the Act). 2. Whether interest on debentures in all circumstances is liable to be considered income only when received by the assessee and not when it has been due? (Question of mixed law and fact concerning the accrual of income). The revenue was represented by Shri Manish Bhatt, and the respondent by Shri R.K. Patel (through Shri B.G. Karia). The judgment does not record specific arguments made by each side but refers to a previous judgment for guidance.

Which sections of the Income-tax Act were involved?

Section 256(2)

AI-generated summary — verify with the full judgment below

ITR/46/2000 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 46 of 2000 For Approval and Signature: HONOURABLE MR.JUSTICE ANIL R. DAVE 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 ? ========================================================= COMM. OF INCOME TAX - Applicant(s) Versus PALLAVI MAYOR T. NO. 18 - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, MR RK PATEL for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE ANIL R. DAVE and HONOURABLE MR.JUSTICE Z.K.SAIYED Date : 12/12/2007 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE ANIL R. DAVE)

ITR/46/2000 2/3 JUDGMENT

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