COMMISSIONER OF INCOME TAX vs. GUJARAT TUBE WELL CO.

ITR/197/1995HC GujaratGJHC24022520199503 August 2006Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG6 pages
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What were the facts?

This case involves an Income Tax Reference (ITR) No. 197 of 1995 before the High Court of Gujarat. The reference was made by the Income Tax Appellate Tribunal (ITAT) on questions of law arising from its order. The assessee is M/s. Gujarat Tube Well Co., and the applicant is the Commissioner of Income Tax. The judgment notes significant issues with the paper book submitted by the Revenue, describing it as illegible and a "misconduct." The High Court Registry was directed to send the complete papers to the Vice President of the ITAT for proper handling. The reference pertains to depreciation on dumpers and investment allowance on dumpers and water tanks treated as plant.

What did the High Court hold?

The High Court answered Question 1 in favour of the Assessee, citing a judgment reported in 165 ITR 160. For Question 2, the High Court answered in favour of the Revenue. The Court relied on the Supreme Court's decision in Commissioner of Income Tax vs. N.C. Budharaja And Co. & Anr., reported in 204 I.T.R. 412. The Supreme Court had interpreted Section 32A and held that the construction of a dam, bridge, building, road, canal, and similar constructions do not fall within the ambit of "manufacture" or "production" of an article or thing. Therefore, if road construction is not considered manufacture or production, investment allowance would not be permissible. The Tribunal was held to be unjustified in reversing the order of the Commissioner of Income-Tax (Appeals) and directing a fresh assessment under Section 263. The Court imposed costs of Rs. 10,000/- on the Revenue due to their "callous conduct" and submission of an "absurd paper book."

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in holding that depreciation at the rate of 30% is available on dumpers? (Question of law and fact, concerning depreciation provisions). 2. Whether the Appellate Tribunal is right in law and on facts in holding that the Income Tax Officer had rightly allowed investment allowance on the cost of dumpers and water tank treating these items as plant? (Question of law and fact, concerning investment allowance under Section 32A). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: For Question 1, the Revenue does not appear to have made specific arguments in the High Court, as the court straightway answers it in favour of the assessee. For Question 2, the Revenue argued that the Income Tax Officer erred in granting investment allowance on dumpers and water tanks. The Revenue contended that road construction is not an industrial activity amounting to production or manufacture of an article or thing, thus investment allowance was unjustified. The Revenue also argued that the Tribunal was unjustified in reversing the Commissioner of Income-Tax (Appeals) order under Section 263.

Which sections of the Income-tax Act were involved?

Section 32A,Section 263

AI-generated summary — verify with the full judgment below

ITR/197/1995 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE NO. 197 OF 1995 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 M/S. GUJARAT TUBE WELL CO. - Opponent(s) ========================================================= Appearance : 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 : 03/08/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG)

It is most unfortunate that the Income Tax Appell

The order continues below.

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