COMMISSIONER OF INCOME-TAX vs. CADILA CHEMICALS PVT LTD

ITR/109/1995HC GujaratGJHC24022434199515 February 2006Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
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What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'A', had decided a matter concerning the computation of capital employed for granting relief under Section 80J of the Income-tax Act, 1961, for the Assessment Year 1981-82. The Commissioner of Income-tax (Revenue) sought a reference to the High Court on this issue. The ITAT had followed its earlier decision in the assessee's own case for Assessment Year 1982-83. The Revenue had previously filed Income Tax Reference No. 289 of 1993 before the High Court, which was decided on July 11, 2005, in the case of Commissioner of Income-tax Vs. Cadila Chemicals P. Ltd. [2005] 278 ITR 633 (Guj.), answering the question in favour of the assessee.

What did the High Court hold?

The High Court, in the facts and circumstances, found it unnecessary to elaborate on the facts and contentions. It referred to its earlier judgment in the case of Commissioner of Income-tax Vs. Cadila Chemicals P. Ltd. (supra), which dealt with a similar issue for the assessee. Following the reasoning and decision in that precedent, the High Court answered the referred question in the affirmative, meaning in favour of the assessee and against the revenue. The operative direction was that the reference stands disposed of, with no order as to costs. The specific principle (ratio decidendi) for future cases would be that if the High Court has already ruled on the computation of capital for Section 80J relief in the assessee's own case for a prior assessment year, that decision will govern subsequent references on the same issue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the question regarding the computation of capital employed for granting relief under Section 80J of the Income-tax Act, 1961, was rightly decided by the Income-tax Appellate Tribunal? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee in this reference. However, the fact that the High Court answered the question in favour of the assessee implies that the assessee's position, as upheld by the ITAT and subsequently by the High Court, was that the computation of capital employed was correctly determined. Revenue's Contention: The Revenue, as the applicant for the reference, contended that the ITAT's decision on the computation of capital employed for Section 80J relief was incorrect. The Revenue sought to challenge this decision through the reference, implying disagreement with the Tribunal's interpretation or application of the law regarding capital computation.

Which sections of the Income-tax Act were involved?

Section 80J,Section 256(2)

AI-generated summary — verify with the full judgment below

ITR/109/1995 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.109 of 1995 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ===================================================== 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 CADILA CHEMICALS PVT LTD - Respondent(s) ===================================================== Appearance : MR BB NAIK for Applicant(s) : 1, MR BD KARIA with MR RK PATEL for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 15/02/2006 ORAL JUDGMENT (Per : HONOURABLE MS.JUSTICE H.N.DEVANI)

The order continues below.

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