COMMISSIONER OF INCOME TAX vs. PRABHUDAS KISHOREDAS TOBACCO PRODUCTS LTD.

TAXAP/682/2005HC GujaratGJHC24034077200531 March 2006Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE BANKIM.N.MEHTA4 pages
AI SummaryDismissed

What were the facts?

The assessee, Prabhudas Kishore das Tobacco Products Ltd., engaged in manufacturing bidis, claimed deductions under Sections 80HH, 80HHA, and 80I of the Income-tax Act, 1961, for assessment year 1993-94. The Assessing Officer denied the claim, holding that the assessee's activity did not constitute an industrial undertaking as it lacked plant and machinery, relying on the fact that raw materials were given to contract workers for rolling bidis. The Commissioner (Appeals) allowed the deduction, relying on a High Court decision. The Tribunal upheld the Commissioner's order, citing its own previous decisions in favour of the assessee for assessment years 1984-85 and 1985-86. The revenue appealed to the High Court.

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was right in law in allowing the deduction under Sections 80HH, 80HHA, and 80I of the Income-tax Act, 1961. The Court followed its own decision in Income Tax Reference No. 99 of 1995, which dealt with the assessee's case for assessment years 1984-85 and 1985-86. In that reference, the Division Bench had opined that the assessee company was an industrial undertaking engaged in the business of manufacturing bidis. Therefore, applying the principle laid down in the earlier reference, the present appeal filed by the revenue was dismissed. The operative direction was the dismissal of the revenue's appeal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee is entitled to deduction under Sections 80HH, 80HHA and 80I of the Income-tax Act, 1961? Assessee's Contention: The judgment does not explicitly record the assessee's contentions before the High Court, but it implies the assessee relied on the Tribunal's decision and the High Court's previous ruling in its own case. Revenue's Contention: The revenue contended before the Assessing Officer that the assessee was not an industrial undertaking because it did not possess any plant or machinery and was merely outsourcing the rolling of bidis to contract workers. This position was implicitly carried forward in the appeal to the High Court.

Which sections of the Income-tax Act were involved?

Section 80HH,Section 80HHA,Section 80I,Section 260A

AI-generated summary — verify with the full judgment below

TAXAP/682/2005 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 682 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE J.M.PANCHAL HONOURABLE MR.JUSTICE BANKIM.N.MEHTA ============================================================== 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 - Appellant(s)

Versus PRABHUDAS KISHOREDAS TOBACCO PRODUCTS LTD. - Opponent(s) ============================================================== Appearance : MR MANISH R BHATT for Appellant(s) : 1, MS VAIBHAVI PARIKH with MR SN SOPARKAR for Opponent(s) : 1. ================================================================== CORAM :  HONOURABLE MR.JUSTICE J.M.PANCHAL and HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Date : 31/03/2006 ORAL JUDGMENT (Per : HO

The order continues below.

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