COMMISSIONER OF INCOME TAX vs. DEEPAK NITRITE LTD.

ITR/110/1987HC GujaratGJHC24011843198719 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax (Revenue) against Deepak Nitrite Ltd. (Assessee) before the High Court of Gujarat. The reference was made under Section 256(1) of the Income Tax Act, 1961, concerning two questions of law. During the pendency of the reference, it was submitted that both questions had already been decided. The first question pertained to the deletion of an addition of Rs. 98,946/- made towards foreign tour expenses by the Commissioner of Income-tax (Appeals). The second question concerned the inclusion of research and development capital assets in the capital employed for the purpose of Section 80J of the Income Tax Act, 1961.

What did the High Court hold?

The High Court decided both referred questions. For the first question, regarding the deletion of Rs. 98,946/- from foreign tour expenses, the Court noted that a similar question was previously decided by the same High Court in the case of C.I.T. vs. Deepak Nitrite Ltd., 247 I.T.R. 362, in favour of the revenue and against the assessee. Therefore, the Court answered this question in the negative, i.e., against the assessee and in favour of the revenue. For the second question, concerning the inclusion of research and development capital assets in capital employed for Section 80J, the Court was informed that this question had been decided in the case of C.I.T. vs. Sarabhai Sons Pvt. Ltd., 204 I.T.R. 728. Following the judgment in that case, the High Court answered the second question in the affirmative, i.e., in favour of the assessee and against the revenue. The reference was disposed of accordingly.

What were the issues?

The Tribunal had to decide the following two questions referred by the Revenue: 1. Whether, in law and on facts, the appellate Tribunal is right in confirming the view taken by the Commissioner of Income-tax (appeals) in deleting the addition of Rs.98,946/- out of foreign tour expenses? (Question of law and fact, concerning Section 256(1) of the Income Tax Act, 1961). 2. Whether, in law and on facts, the assessee is entitled to the inclusion of research and development capital assets in capital employed for the purpose of Section 80J of the Income-tax Act, 1961? (Question of law and fact, concerning Section 80J and Section 256(1) of the Income Tax Act, 1961). Contentions: Assessee: Not recorded. Revenue: Submitted that both questions have been decided during the pendency of the reference. For the first question, relied on the High Court's decision in C.I.T. vs. Deepak Nitrite Ltd., 247 I.T.R. 362. For the second question, relied on the High Court's decision in C.I.T. vs. Sarabhai Sons Pvt. Ltd., 204 I.T.R. 728.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 80J

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 110 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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