COMMISSIONER OF INCOME TAX vs. ZAVERCHAND GAEKWAD LTD.

ITR/55/1995HC GujaratGJHC24022380199508 December 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
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What were the facts?

The Commissioner of Income Tax (Revenue) has referred a question of law to the High Court of Gujarat at Ahmedabad concerning the assessee, Zaverchand Gaekwad Ltd. The assessment years under consideration are 1985-86 to 1987-88. The dispute revolves around the assessee's entitlement to a deduction for royalty paid to Enertrom Systems at a rate of 2% on the sale of Bellow Expansion joints. The Income Tax Appellate Tribunal (ITAT) had ruled in favor of the assessee. The Revenue's appeal to the High Court is based on the ITAT's order. The learned standing counsel for the Revenue acknowledged that this Court had previously decided a similar issue for the same assessee for assessment years 1982-83 to 1984-85.

What did the High Court hold?

The High Court of Gujarat, in its judgment dated 08/12/2005, decided the Income Tax Reference No. 55 of 1995. The Court referred to its own prior judgment dated 02/08/2005 in Income Tax Reference No. 300 of 1993, which dealt with the same controversy for the same assessee for assessment years 1982-83 to 1984-85. In that prior judgment, the Court had answered the relevant question in favor of the assessee and against the Revenue. Therefore, for the present reference concerning assessment years 1985-86 to 1987-88, the Court followed its previous decision. The question referred to the Court was answered in the affirmative, meaning in favor of the assessee and against the Revenue. The reference was disposed of accordingly, with no order as to costs. The specific reasoning from the prior judgment was not reiterated but was the basis for the current decision.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled to deduction in respect of royalty paid to Enertrom Systems at the rate of 2% on the sale of Bellow Expansion joints? (Question of law turning on the interpretation of relevant provisions of the Income Tax Act, 1961, concerning deductibility of business expenditure). Assessee's Contention: Not recorded in detail as the matter was decided based on a previous judgment. Revenue's Contention: Not recorded in detail as the matter was decided based on a previous judgment. However, the Revenue initiated the reference, indicating disagreement with the Tribunal's finding.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/55/1995 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 55 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 ZAVERCHAND GAEKWAD LTD. - Respondent(s) ============================================================== Appearance : MR MANISH R BHATT for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ================================================================== CORAM :  HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 08/12/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA)

ITR/55/1995 2

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