COMMISSIONER OF INCOME-TAX vs. AIR CONTROL & CHEMICAL ENGG. CO. LTD.

ITR/56/1988HC GujaratGJHC24013133198803 September 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryAllowed

What were the facts?

This is an Income Tax Reference at the instance of the revenue concerning assessment years 1979-80 and 1980-81. The reference arises from a decision of the Income Tax Appellate Tribunal (ITAT). The revenue is the petitioner, and the respondent is AIR Control & Chemical Engg. Co. Ltd. The ITAT had held that house rent allowance paid to an employee is not a perquisite for the purpose of Section 40A(5) of the Income Tax Act. The revenue has presented this reference to the High Court for its opinion on this matter. The High Court heard the counsel for the revenue, and the assessee, though served, did not appear.

What did the High Court hold?

The High Court, upon hearing the revenue's counsel, acknowledged that the issue was concluded by the Supreme Court's decision in CIT vs. Mafatlal Gangabhai (219 ITR 644). Therefore, the Court answered the referred question in the affirmative, meaning in favour of the assessee and against the revenue. The reasoning is based on the binding precedent set by the Supreme Court. The operative direction is that the reference stands disposed of with no order as to costs. The High Court did not leave any issue undecided.

What were the issues?

1. Whether the Tribunal is right in holding that the house rent allowance paid to an employee is not a perquisite for the purpose of Section 40A(5) of the Income Tax Act, 1961? Contentions: Assessee: No arguments were recorded for the assessee as none appeared. Revenue: The learned counsel for the revenue fairly pointed out that the controversy is concluded in favour of the assessee by the decision of the Supreme Court in CIT vs. Mafatlal Gangabhai (219 ITR 644).

Which sections of the Income-tax Act were involved?

Section 40A(5)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 56 of 1988

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 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 be circulated to the Civil Judge? : NO

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 40A(5)

All 51 judgments and leading authorities on Section 40A(5) →

Recent GST High Court judgments

Search GST case law →