COMMISSIONER OF INCOME TAX vs. M/S.AMORA CHEMICALS PVT.LTD.

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ITR/13/1997HC GujaratGJHC24020177199731 August 2006Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was right and justified in deciding the issue in favour of the assessee. The Court noted that the very same issue concerning the same assessee for earlier assessment years (1979-80 to 1981-82) had been decided by the Gujarat High Court in ITR No. 79/88 (reported in 2002 258 ITR 519) in favour of the assessee. As the issue was already decided by the High Court between the same parties for earlier years, the Tribunal's decision for the current assessment years was upheld. Question 2 in ITR 13/97 was dependent on Question 1. Since Question 1 was decided against the Revenue, Question 2 was also decided against the Revenue and in favour of the assessee. The references were answered against the Revenue and in favour of the assessee. No specific amount in dispute was mentioned.

What were the facts?

The assessee, Amora Chemicals Pvt. Ltd., leased property and advanced loans for further construction. Parts of the constructed property were then leased to Bank of Baroda. The assessee treated the rental income as business income, but the Revenue contended otherwise. The Income Tax Appellate Tribunal (ITAT) had previously ruled in favour of the assessee for assessment years 1979-80 to 1981-82, holding the lease income as business income. This earlier decision was upheld by the Gujarat High Court in ITR No. 79/88, reported in 2002 258 ITR 519. The present references concern assessment years 1986-87 and 1984-85, with the Revenue challenging the ITAT's decision to again treat the rental income as business income and allow carry-forward of business losses.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the rental income from Bank of Baroda was taxable under the head 'Income from business' (ITR No. 11/97 and ITR No. 13/97, Question 1). 2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in upholding the direction given by the first appellate authority to allow carry forwarded business loss treating the income from leasing as income from business (ITR No. 13/97, Question 2). Assessee's contentions: The assessee treated the rental income as business income. The ITAT had consistently held this view for earlier assessment years, and this was upheld by the Gujarat High Court. Therefore, the current decision in favour of the assessee is justified. Revenue's contentions: The Revenue contended that the rental income was not taxable under the head 'Income from business'. The specific arguments of the Revenue are not detailed in the judgment, beyond their disagreement with the Tribunal's finding.

Which sections of the Income-tax Act were involved?

None explicitly mentioned in the provided text, other than general reference to assessment years and heads of income.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR/11/1997 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 11 of 1997 With INCOME TAX REFERENCE No. 13 of 1997 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 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 AMORA CHEMICALS PVT. LTD. - Respondent(s) ========================================================= Appearance : MRS. MONA M BHATT for Applicant(s) : 1, None for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 31/08/2006 ITR/11/1997 2/4

JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG)

1.

Mrs. Mona Bhatt, learned counsel for the Revenue. None for the respondent though served. This order shall dispose of ITRs. No. 11/97 and 13/97. 2. At the instance of the Revenue, Income-tax Appellate Tribunal, Ahmedabad Bench ”C” has referred the following questions arising out of the Income-tax Appeal No. 2142/Ahd./91, relating to assessment year 1986-87 and Income-tax Appeal No. 2976/Ahd./91 relating to the assessment year 1984-85 to this Court for the opinion of this Court. ITR No. 11/97:- “Whether on the facts and in circumstances of the case the Tribunal is right in law in holding that the rental income from Bank of Baroda was taxable under the head Income from business?” ITR No. 13/97:- “1.Whether on the facts and in circumstances of the case the Appellate Tribunal was right in holding that the rental income from Bank of Baroda was taxable under the head Income from business?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is ITR/11/1997 3/4 JUDGMENT justified in upholding the direction given by the first appellate authority to allow carry forwarded business loss treating the income from leasing as income from business?”

3.

The short facts necessary for disposal of the present References are that the assessee is a company, which had entered into a lease agreement with Hindu Undivided Family, after taking property on lease, it advanced certain loans to the said Hindu Undivided Family for further construction, thereafter, certain parts which could be constructed were given on lease in favour of the bank of the assessee. The rent receipt from the bank was treated by the assessee as income from business, but the contention of the Revenue was otherwise. The Tribunal, in the matter of the very same assessee for the assessment years 1979-80 to 1981-82 observed that the lease income would be taken to be income from business and it would be accordingly taxable as income from business. Relying upon the earlier judgment, the Tribunal decided the matter in favour of the assessee. The earlier matter was referred to this Court at the instance of the Revenue and was registered as ITR No. 79/88. The said matter was finally decided by this Court on 28.8.02 [reported in 2002 258 ITR 519), in favour of the assessee. As the issue is already decided by this Court in ITR/11/1997 4/4 JUDGMENT relation to the earlier years between the same parties, we must hold that the Tribunal was right and justified in deciding the issue in favour of the assessee. Question no.2 in ITR 13/97 is dependent upon the question no.1 and as the question no.1 in both the References is decided against the Revenue, question no.2 in ITR No. 13/97 is also decided against the Revenue and in favour of the assessee. Both the References are answered against the Revenue and in favour of the assessee. They are accordingly disposed of. No costs. [R.S. GARG, J.] [M.R. SHAH, J.] pirzada/-

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