COMMISSIONER OF INCOME TAX vs. BIRADARI INVESTMENT PVT. LTD.

ITR/78/1995HC GujaratGJHC24022403199522 December 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
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What were the facts?

The Commissioner of Income-tax, Gujarat-II (Revenue) is the applicant, and Biradari Investment Pvt. Ltd. (Assessee) is the respondent. The assessment year is 1985-86, with the relevant accounting period ending June 30, 1984. The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench "C", had deleted an addition of interest on an 11% bond on an accrual basis and interest on convertible debentures of a public limited company. The Revenue has filed this reference under Section 256(1) of the Income-tax Act, 1961, challenging the ITAT's order. Both parties agreed that the matter was covered by a previous judgment of the High Court in Income Tax Reference No. 224 of 1991.

What did the High Court hold?

The High Court, following its own previous decision in Income Tax Reference No. 224 of 1991, dated October 1, 2002, answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The ITAT had deleted the addition of interest on an 11% bond on an accrual basis and interest on convertible debentures of a public limited company. The High Court's reasoning was based on the binding precedent established in the earlier reference. The ratio decidendi is that if a High Court has already decided a similar issue in a previous reference, that decision will govern subsequent references involving the same question. The operative direction is that the reference stands disposed of accordingly, with no order as to costs.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of interest on an 11% bond on an accrual basis for Assessment Year 1985-86? 2. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of interest on convertible debentures of a public limited company for Assessment Year 1985-86? Assessee's contentions: Not recorded. Revenue's contentions: The Revenue has challenged the ITAT's deletion of the additions. The specific grounds or arguments raised by the Revenue are not detailed in the judgment, other than its challenge to the ITAT's decision. The Revenue relies on the fact that the ITAT followed its earlier decision which was subsequently upheld by this Court.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/78/1995 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.78 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 ? ========================================================= THE COMMISSIONER OF INCOME-TAX, GUJARAT-II- Applicant(s)

Versus BIRADARI INVESTMENT PVT. LTD. - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, MR BD KARIA for MR RK PATEL 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 : HONOURABL

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