NIRMA SPECIFIC FAMILY TRUST vs. COMMISSIONER OF INCOME-TAX

ITR/61/1993HC GujaratGJHC24021173199301 March 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
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What were the facts?

This judgment concerns two consolidated Income Tax References, No. 61 of 1993 at the instance of the assessee, Nirma Specific Family Trust, and No. 61A of 1993 at the instance of the revenue, the Commissioner of Income-tax. The references arise from orders passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A'. For Reference No. 61 of 1993, the assessee's learned Senior Advocate stated that he did not press the reference under instructions, leading to it being returned unanswered. For Reference No. 61A of 1993, two questions of law were referred by the Tribunal at the instance of the revenue concerning assessment years 1984-85 and 1985-86, and 1984-85 respectively.

What did the High Court hold?

For Income Tax Reference No. 61 of 1993, the assessee, through its counsel, stated that it did not press the reference, and accordingly, the reference was returned unanswered by the High Court. For Income Tax Reference No. 61A of 1993, the first question, concerning assessment years 1984-85 and 1985-86, was answered in the affirmative, in favour of the assessee and against the revenue. This decision was based on the common order and facts governing a related reference, Income Tax Reference No. 59-A of 1993. The second question, relatable to assessment year 1984-85, was also answered in the affirmative, in favour of the assessee and against the revenue. This was based on the accepted position that the issue was covered by the High Court's prior decision in Commissioner of Income Tax v. Tanvi Sajni Family Trust, 209 ITR 497. Both references were disposed of accordingly, with no order as to costs.

What were the issues?

The High Court was called upon to decide questions of law referred by the Income Tax Appellate Tribunal. For Income Tax Reference No. 61 of 1993, at the instance of the assessee, five questions were posed: (1) Whether interest including bank interest earned by the assessee was not liable for deduction under Section 80I. (2) Whether the Tribunal had jurisdiction to direct the Assessing Officer to investigate and decide the allowability of additional commission while deciding appeals against an order under Section 263. (3) Whether the Tribunal should have cancelled the CIT's order directing disallowance of additional commission. (4) Whether the Tribunal had jurisdiction to direct the Assessing Officer to investigate excess consumption of soda ash and make additions. (5) Whether the Tribunal should have cancelled the CIT's order directing additions for excess soda ash consumption. For Income Tax Reference No. 61A of 1993, at the instance of the revenue, two questions were posed: (1) Whether the Tribunal was right in holding that the Assessing Officer was justified in including excess advertisement recovery in computation for deduction under Section 80I. (2) Whether interest payable to discretionary trusts on amounts lying with the assessee trust was allowable as a deduction. The assessee did not press its reference. The revenue argued that the Tribunal erred in its findings on the two questions referred by it.

Which sections of the Income-tax Act were involved?

Section 80I,Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 61 of 1993 with INCOME TAX REFERENCE NO.61A of 1993

For Approval and Signature:

HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to

The order continues below.

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