COMMISSIONER OF INCOME TAX vs. APEX ELECTRICALS (P) LTD.

ITR/156/1995HC GujaratGJHC24022479199525 September 2006Author: HONOURABLE MR. JUSTICE D.H.WAGHELA,HONOURABLE MR. JUSTICE R.S.GARG2 pages

AI SummaryRemanded

What did the High Court hold?

The High Court of Gujarat, for reasons stated in Income Tax Reference No. 239/95 decided on the same day, answered the referred question against the interest of the Revenue and in favour of the assessee. This implies that the High Court agreed with the ITAT's decision to delete the disallowance. The reasoning, though not elaborated in this specific judgment, would have followed the rationale of the related reference. The ratio decidendi would be that lease rent, under the circumstances of the related case, was not to be treated as a part payment for capital asset acquisition. The operative direction was that the Reference stands disposed of. No costs were awarded.

What were the facts?

The Income-tax Appellate Tribunal (ITAT), Ahmedabad Bench 'C', at the instance of the Revenue, referred a question of law to the High Court of Gujarat concerning assessment years 1984-85, 1985-86, and 1986-87. The reference arose from ITAT appeals numbered 122, 152, 633, 634, and 732 of 1990. The dispute centered on the deletion of disallowances made by the Assessing Officer (AO) in respect of lease rent amounting to Rs. 50,000. The AO was of the opinion that this lease rent constituted a part payment for the acquisition of a capital asset. The assessee is Apex Electricals (P) Ltd., and the applicant is the Commissioner of Income-tax.

What were the issues?

1. Whether, on the facts and in law, the Appellate Tribunal was right in deleting the disallowances in respect of lease rent of Rs. 50,000, which, in the opinion of the Assessing Officer, was a part payment for the acquisition of a capital asset? (Question of law and fact, concerning the nature of lease rent payment). Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the fact that the question is referred at the instance of the Revenue implies the assessee would have argued for the deletion of the disallowance. Revenue's Contention: The Revenue contended that the lease rent of Rs. 50,000 was a part payment for the acquisition of a capital asset, and therefore, the disallowance made by the AO was justified. The Revenue's stance led to the reference of the question to the High Court.

Which sections of the Income-tax Act were involved?

256[1]

AI-generated summary — verify with the full judgment below

ITR/156/1995 1/2 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 156 of 1995 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE D.H.WAGHELA ========================================================= 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 APEX ELECTRICALS (P) LTD. - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant None for Respondent ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE D.H.WAGHELA Date : 25/09/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG)

ITR/156/1995 2/2 JUDGMENT

The Income-tax Appellate Tri

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