COMMISSIONER OF INCOME TAX vs. SURAT DIST CO OP SPINNING MILL

ITR/280/1987HC GujaratGJHC24012012198720 August 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Gujarat, following its earlier decision in CIT vs. Surat District Cooperative Milk Producers' Union (211 ITR 726), left the referred questions unanswered. The Court directed the Income Tax Appellate Tribunal to decide the questions on their merits. This decision was to be made after considering the relevant facts and the law laid down by the Supreme Court in the cases of Cambay Electric Supply Industrial Co. Ltd. vs. CIT (113 ITR 84) and Distributors (Baroda) Pvt. Ltd. vs. Union of India (155 ITR 120), as well as the High Court's own prior ruling. The reference was disposed of accordingly, with no order as to costs. No specific finding was given on the eligibility for deduction or the interpretation of Section 80P(2)(d) by the High Court in this judgment.

What were the facts?

The Commissioner of Income Tax (Revenue) referred two questions of law to the High Court of Gujarat concerning assessment years 1978-79 and 1981-82. The assessee is Surat Dist Co Op Spinning Mill. The dispute pertains to the eligibility of the assessee for deduction under Section 80P(2)(d) of the Income Tax Act on interest received from cooperative societies. For AY 1978-79, the interest received was Rs. 3,396, while interest paid was Rs. 6,52,321. For AY 1981-82, interest received was Rs. 55,503, and interest paid was Rs. 4,48,000. The Revenue contended that no deduction should be allowed as there was no positive surplus from this source. The High Court noted a previous reference on a similar controversy in CIT vs. Surat District Cooperative Milk Producers' Union, where the question was left unanswered and the Tribunal was directed to decide on merits.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was eligible for a deduction under Section 80P(2)(d) of the Income Tax Act on interest of Rs. 3,396 received from cooperative societies, without considering that a sum of Rs. 6,52,321 was paid as interest to other cooperative societies, resulting in no positive surplus under this source? (AY 1978-79) 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was eligible for relief under Section 80P(2)(d) of the Income Tax Act on interest of Rs. 55,503 received from cooperative societies, without considering that a sum of Rs. 4,48,000 was paid as interest to other cooperative societies, resulting in no positive surplus under this source? (AY 1981-82) Assessee's Contention: Not recorded. Revenue's Contention: The assessee is not eligible for deduction under Section 80P(2)(d) as there is no positive surplus from the interest income source, given the substantial interest paid to other cooperative societies.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 280 of 1987

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.

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