SURAT DIST. CO.OP.SPINNING MILLS LTD. vs. COMMISSIONER OF INCOME TAX

ITR/125/1986HC GujaratGJHC24010749198610 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What were the facts?

This case involves an Income Tax Reference filed by the assessee, Surat Dist. Co.Op. Spinning Mills Ltd., against the Commissioner of Income Tax. The reference was made at the instance of the assessee to the High Court of Gujarat under Section 256(2) of the Income Tax Act, 1961, seeking the court's opinion on three questions of law. These questions arose from an order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B'. The procedural history indicates that the reference was pending before the High Court when the Supreme Court rendered judgments that answered all three questions.

What did the High Court hold?

The High Court, per Justice A.R. Dave and Justice D.A. Mehta, disposed of the reference based on Supreme Court judgments that had answered all three questions during the pendency of the reference. For the first two questions, the High Court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kotagiri Industrial Co-operative Tea Factory Ltd., 224 ITR 604. The court answered these questions in the affirmative, in favour of the revenue and against the assessee. For the third question, the High Court referred to the Supreme Court's ruling in Commissioner of Income Tax v. Shri Arbuda Mills Ltd., 231 ITR 50, and also answered this question in the affirmative, favouring the revenue and against the assessee. The reference was disposed of accordingly, with no order as to costs.

What were the issues?

The Tribunal had to decide three questions of law at the instance of the assessee: 1. Whether the Tribunal was correct in holding that the case of Cloth Traders Co. (P) Ltd. (118 ITR 243) was not applicable because it referred to Sections 80M, 80K, 80MM, and 80N but not Section 80J, while relying on Cambay Electricity Co. Ltd. (115 ITR 84), which also did not refer to Section 80J but only Section 80L. 2. Whether the Tribunal erred in not holding that relief under Section 80J should be allowed first, in preference to statutory deductions under Sections 35(2), 33, or 72, from the gross total income which included profits from a new industrial undertaking. 3. Whether the Tribunal was right in holding that the Commissioner of Income Tax had jurisdiction to initiate action under Section 263 of the Income Tax Act, even though the assessment order was under appeal. The assessee contended that the Tribunal's reasoning on the applicability of precedents and the order of deductions was flawed. The revenue's contentions are not explicitly detailed but would have supported the Tribunal's findings. The Supreme Court's decisions were pivotal in resolving these issues.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 80M,Section 80K,Section 80MM,Section 80N,Section 80J,Section 35(2),Section 33,Section 72,Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 125 of 1986

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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