COMMISSIONER OF INCOME-TAX vs. ELECON ENGINEERING CO LTD

ITR/2/1987HC GujaratGJHC24011735198719 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryAllowed

What were the facts?

This case involves an Income Tax Reference filed by the revenue (Commissioner of Income-tax) at the instance of the Income Tax Appellate Tribunal, Ahmedabad Bench 'B'. The reference concerns the assessment year(s) not explicitly stated but implied to be related to a previous decision. The order or action under challenge is the Tribunal's decision on the allowability of an expenditure of Rs. 14,04,022/- as a revenue deduction. The procedural history involves a question of law being referred to the High Court for its opinion under Section 256(1) of the Income-tax Act, 1961. The High Court's attention was drawn to a previous judgment delivered in the assessee's own case (Elecon Engineering Co Ltd) for Assessment Year 1981-82, where a similar question was decided in favour of the assessee.

What did the High Court hold?

The High Court decided the question referred to it in the affirmative, in favour of the assessee and against the revenue. The reasoning was based on a prior judgment of the same High Court, delivered in the assessee's own case (ITR No. 49/88 dated 18.1.2001), which had addressed a similar question of law for the Assessment Year 1981-82. In that previous judgment, the Court had decided the reference in favour of the assessee. Therefore, following the established precedent set by its own prior decision, the Court found the expenditure of Rs. 14,04,022/- to be allowable as revenue deduction. The reference was disposed of accordingly, with no order as to costs. No issue was expressly left undecided.

What were the issues?

1. Whether, in law and on facts, the expenditure of Rs. 14,04,022/- is allowable as revenue deduction? (Question of law and fact, concerning the nature of expenditure and its deductibility under the Income-tax Act). Assessee's Contention: The assessee's case was previously decided in its favour by the High Court on a similar issue for Assessment Year 1981-82. This implies the assessee would argue for consistency and the application of the same principles. Revenue's Contention: The revenue, by referring the question, is seeking to challenge the allowability of the expenditure. The specific arguments of the revenue are not detailed in the judgment, other than its role as the referring party.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 2 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE A.R.DAVE 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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