COMMISSIONER OF INCOME TAX vs. MIHIR TEXTILE LTD

ITR/65/1996HC GujaratGJHC24021745199630 August 2006Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG6 pages
AI SummaryPartly Allowed

What were the facts?

The High Court of Gujarat was considering two Income Tax References. ITR No. 65 of 1996 concerned Assessment Year 1986-87, arising from ITA No. 702/Ahd/1991. The Assessing Officer allowed interest under Section 214 up to the date of regular assessment. The CIT(A), relying on Bardolia Textile Mills Ltd. vs. I.T.O., directed interest up to the date of the appellate order (January 31, 1990). The Tribunal confirmed this. The Revenue sought a reference after the Supreme Court overruled Bardolia Textile Mills in Modi Industries Limited & Ors. vs. Commissioner of Income-Tax & Anr. ITR No. 96 of 1997 concerned Assessment Year 1981-82, arising from ITA No. 714/Ahd/1987.

What did the High Court hold?

The High Court, in light of the Supreme Court's authoritative pronouncement in Modi Industries Limited & Ors. vs. Commissioner of Income-Tax & Anr., held that the Commissioner of Income-Tax (Appeals) and the Tribunal were unjustified in extending the period for granting interest under Section 214 beyond the date of the regular assessment. The Supreme Court clarified that Section 214 interest is payable from the first day of the relevant assessment year to the date of the assessment order. The period covered by Section 244(1A) commences from the date of tax payment. The Court answered Question 1 in ITR No. 65 of 1996 and Question 1 in ITR No. 96 of 1997 in favour of the Revenue. Regarding Question 2 in ITR No. 96 of 1997, the Court noted that in view of the Supreme Court judgment, it was not required to be answered. Both references were disposed of.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to work out the interest under Section 214 for the period up to the date of the order giving effect to the appellate order (for AY 1986-87)? 2. Whether the Appellate Tribunal is right in law and on facts in directing the Income-Tax Officer to award interest under Section 214 on the refund amount of advance tax to the assessee (for AY 1981-82)? 3. Whether the Appellate Tribunal was right in law and on facts in holding that Section 154 was applicable to the case, when the issue raised by the Assessee was wholly debatable (for AY 1981-82)? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue contended that the period for calculating interest under Section 214 should not extend beyond the date of the regular assessment, as per the Supreme Court's decision in Modi Industries Limited & Ors. vs. Commissioner of Income-Tax & Anr. The Revenue also argued that Section 154 was not applicable for a debatable issue.

Which sections of the Income-tax Act were involved?

Section 214,Section 244(1A),Section 154,Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/65/1996 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE NO. 65 OF 1996 With INCOME TAX REFERENCE NO. 96 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 MIHIR TEXTILES LTD. - Opponent(s) ========================================================= Appearance : MRS. MONA BHATT for MR. MANISH R. BHATT for Applicant(s). NONE for Opponent(s). ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 30/08/2006 COMMMON ORAL JUDGMENT (Per

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