COMMISSIONER OF INCOME-TAX vs. INDUSTRIAL MACHINERY MFG.PVT. LTD.

ITR/96/1995HC GujaratGJHC24022421199519 January 2006Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI7 pages
AI SummaryAllowed

What were the facts?

The assessee, Industrial Machinery Mfg. Pvt. Ltd., is challenging an order for Assessment Year 1983-84. The Assessing Officer (AO), while giving effect to a Tribunal's order on August 18, 1988, did not grant interest under Section 214 of the Income-tax Act, 1961, despite the order resulting in a refund. The Commissioner (Appeals) dismissed the assessee's appeal, holding that an appeal against the AO's non-granting of interest under Section 214 was not maintainable under Section 246. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT), which ruled in favour of the assessee, holding that an appeal against an order passed under Section 154 of the Act is maintainable under Section 246. The ITAT also accepted that the case was covered by the jurisdictional High Court's decision in Bardolia Textile Mills. The matter was restored to the AO for fresh consideration and to grant necessary relief.

What did the High Court hold?

The High Court held that an appeal against an order passed under Section 154 of the Income-tax Act, 1961, is maintainable under Section 246 of the Act. The court reasoned that Section 246(1)(f) clearly lists orders under Section 154 that enhance assessment, reduce refund, or refuse a claim as appealable. Furthermore, Section 246(2)(a) incorporates this provision, making it appealable before the Commissioner (Appeals). The court also noted that an order giving effect to an appellate order bears the same characteristic as the original order, which is appealable. Therefore, the Tribunal was justified in holding that the order refusing to grant interest under Section 214 was an appealable order and the Commissioner (Appeals) was not justified in not entertaining the appeal. On merits, the Tribunal's direction to the AO to grant relief in accordance with the ratio of the Bardolia Textile Mills decision was upheld, with no infirmity found. Both questions were answered in the affirmative, in favour of the assessee.

What were the issues?

1. Whether, the Appellate Tribunal is right in law and on facts in holding that an appeal against an order passed by the Income-tax Officer under Section 154 of the Income-tax Act, 1961, is maintainable under Section 246 of the Act? 2. Whether, the Appellate Tribunal is right in law and on facts in holding that the assessee is entitled to interest under Section 214 of the Income-tax Act, 1961? Assessee's Contentions: - An appeal against an order passed under Section 154 of the Act is maintainable under Section 246(1)(f) of the Act, relying on the Bombay High Court decision in Empire Industries Ltd. Vs. Commissioner of Income-tax. - The case is covered by the jurisdictional High Court's decision in Bardolia Textile Mills Vs. Income-tax Officer, Circle-II, Ward-E, Surat. Revenue's Contentions: - The revenue did not present any specific arguments against the maintainability of the appeal or the entitlement to interest under Section 214, as noted by the High Court which observed that the learned counsel for the applicant-revenue was not in a position to point out any infirmity in the Tribunal's direction.

Which sections of the Income-tax Act were involved?

Section 256,Section 246,Section 154,Section 214

AI-generated summary — verify with the full judgment below

ITR/96/1995 1/7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.96 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 INDUSTRIAL MACHINERY MFG.PVT. LTD. - Respondent(s) ===================================================== Appearance : MR TANVISH U BHATT for Applicant(s) : 1, MR MANISH J SHAH for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 19/01/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA)

1.

The Income

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