C.I.T. vs. AJOD INVESTMENT PVT. LTD.

ITR/28/2003HC GujaratGJHC24025684200312 December 2007Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE Z.K.SAIYED3 pages
AI SummaryPartly Allowed

What were the facts?

This case involves an Income Tax Reference filed by the revenue (CIT) against the respondent assessee, Ajod Investment Pvt. Ltd. The reference was made at the instance of the revenue to the High Court of Gujarat under Section 256(2) of the Income-tax Act, 1961. The Income Tax Appellate Tribunal, Ahmedabad Bench 'A', had referred two questions of law for the court's opinion. The High Court heard arguments from both the revenue and the assessee. However, the court noted that the questions referred were no longer res integra, meaning they had already been decided by previous judgments.

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 [2003] 260 ITR 532, answered the referred questions. The first question was answered in the negative, meaning the Tribunal was not right in holding that interest on debentures issued by companies other than specified entities is not taxable under the head 'interest' on securities. This implies the revenue's position on this point was upheld. The second question was answered in the affirmative, meaning interest on debentures is to be considered income only when received by the assessee and not merely when it has become due. This implies the assessee's position on this point was upheld. The reference was disposed of accordingly, with no order as to costs.

What were the issues?

The High Court was asked to decide the following questions of law: 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 local authorities, companies, or corporations established by a central, state, or provincial act is not liable to be computed as income under the head 'interest' on securities, as per Section 18 of the Income-tax Act, 1961? 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, as per Section 5 of the Income-tax Act, 1961? Assessee's Contentions: The judgment does not explicitly record the assessee's contentions. However, their position can be inferred from the questions and the eventual ruling. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions. However, their position can be inferred from the questions and the eventual ruling.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 18,Section 5

AI-generated summary — verify with the full judgment below

ITR/28/2003 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 28 of 2003 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 ? ========================================================= C.I.T. - Applicant(s) Versus AJOD INVESTMENT PVT. LTD. - 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/28/2003 2/3 JUDGMENT

1.

At the instance of

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