COMMISSIONER OF INCOME TAX vs. P M DIESALS PVT LTD

ITR/18/1995HC GujaratGJHC24022343199529 November 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
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What were the facts?

This is an Income Tax Reference filed by the Commissioner of Income Tax against an order of the Income Tax Appellate Tribunal, Ahmedabad Bench “A”. The reference pertains to assessment year 1983-84 and the accounting period ending June 30, 1982. The Tribunal had set aside an order passed by the Commissioner of Income Tax under section 263 of the Income Tax Act, 1961. The Commissioner had directed the Assessing Officer to decide the question of payment of Rs. 2,71,724/- while calculating maximum permissible deduction under the Payment of Bonus Act and also to initiate penalty proceedings under section 275(2)(a) of the Act. The parties agreed that the issues were concluded by this Court's prior decisions.

What did the High Court hold?

The High Court answered both questions in the affirmative, in favour of the assessee and against the revenue. For the first question, the Tribunal's order was upheld, relying on its own previous decision in the assessee's own case for assessment year 1985-86. This decision, which held that productivity-linked bonus is an allowable deduction irrespective of the Payment of Bonus Act, was confirmed by the High Court in a separate judgment (Income Tax Reference No. 300/1994 dated 24/11/2005). For the second question, the Court applied the ratio laid down in its own judgment in CIT v. Parmanand M. Patel, [2005] 278 ITR 3, which concluded the issue in favour of the assessee. The reference was 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 setting aside the order made by the Commissioner of Income Tax whereby he had given direction to the Assessing Officer to decide the question of payment of Rs. 2,71,724/- while working out the cases of maximum permissible deduction under the Payment of Bonus Act (Section 263 of the Income Tax Act, 1961)? - Assessee's contention: Not explicitly recorded, but implied by the Tribunal's order being upheld. - Revenue's contention: Not explicitly recorded, but implied by the reference. 2. Whether the Appellate Tribunal is right in law and on facts in setting aside the order passed by the Commissioner of Income Tax whereby he had directed the assessing officer to initiate penalty proceedings under section 275(2)(a) of the Act? - Assessee's contention: Not explicitly recorded, but implied by the Tribunal's order being upheld. - Revenue's contention: Not explicitly recorded, but implied by the reference.

Which sections of the Income-tax Act were involved?

Section 263,Section 275(2)(a),Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/18/1995 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 18 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 P M DIESELS PVT LTD - Respondent(s) ============================================================== Appearance : MR MANISH R BHATT for Applicant(s) : 1, MR SN SOPARKAR for Respondent(s) : 1, ================================================================== CORAM :  HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 29/11/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1.Income Tax Appel

The order continues below.

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