KASHIRAM TEXTILE MILLS (P) LTD vs. COMMISSIONER OFINCOME TAX

ITR/74/1995HC GujaratGJHC24022399199522 December 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
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What were the facts?

This case concerns an Income Tax Reference filed by Kashiram Textile Mills (P) Ltd. (the assessee) against the Commissioner of Income Tax (the revenue) before the High Court of Gujarat. The reference pertains to Assessment Year 1981-82, with the corresponding accounting period ending September 30, 1980. The Income Tax Appellate Tribunal (ITAT) had made a reference of two questions of law to the High Court at the assessee's instance. The parties agreed that the questions were concluded by prior decisions of the High Court, obviating the need for a detailed factual narration or argument exposition.

What did the High Court hold?

The High Court addressed two questions of law referred by the ITAT. Regarding the first question, concerning the limitation of the assessment order, the Court noted the assessee's fair submission acknowledging a High Court decision in CIT vs. Shree Digvijay Woollen Mills Ltd. [1995] 212 ITR 310 (Guj.). The Court held that the ITAT was justified in its finding that the assessment order was not barred by limitation. The question was answered in the affirmative, favouring the Revenue. For the second question, regarding the disallowance of interest payments of Rs.3,12,488/- made to the Income Tax Department under Sections 215, 216, and 220(2), the Court referred to its decision in Saurashtra Cement and Chemical Industries Ltd. vs. CIT [1995] 213 ITR 523 (Guj.). Applying the principles from this precedent, the Court held that the ITAT was justified in disallowing the interest as a deduction under Sections 28, 36, 37, or 80V. This question was also answered in the affirmative, favouring the Revenue. The reference was disposed of accordingly.

What were the issues?

The Tribunal had to decide two questions of law referred at the instance of the assessee: 1. Whether, on the facts and circumstances of the case, the ITAT was justified in holding that the assessment order passed by the Income Tax Officer is not barred by limitation? This question turns on the interpretation of relevant limitation provisions under the Income-tax Act, 1961. 2. Whether, on the facts and circumstances of the case, the ITAT was justified in holding that interest payment of Rs.3,12,488/- to the Income Tax Department under Sections 215, 216, and 220(2) of the Act are not allowable deduction either under Section 28, Section 36, Section 37, or Section 80V of the Act? This question concerns the deductibility of interest paid to the Income Tax Department. Assessee's contentions: The assessee, through its advocate, fairly drew attention to High Court decisions that concluded the issues in favour of the Revenue. No specific arguments were recorded for the assessee beyond this acknowledgment. Revenue's contentions: The Revenue, through its learned Senior Standing Counsel, did not present separate arguments, as the issues were considered concluded by High Court decisions.

Which sections of the Income-tax Act were involved?

Section 215,Section 216,Section 220(2),Section 28,Section 36,Section 37,Section 80V,Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/74/1995 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.74 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 ? ========================================================= KASHIRAM TEXTILE MILLS (P) LTD - Applicant(s) Versus COMMISSIONER OF INCOME TAX - Respondent(s) ========================================================= Appearance : MR MANISH J SHAH for Applicant(s) : 1, MR MANISH R BHATT for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 22/12/2005 ORAL JUDGMENT (Per : HONOURABLE MS.JUSTICE H.N.DEVANI) 1.

The order continues below.

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