GUJARAT AMBUJA PROTEINS LIMITED vs. DY. COMMISSIONER OF INCOME TAX

Facts

The assessee, Gujarat Ambuja Proteins Limited, filed its return of income for Assessment Year 1993-94, declaring a total income of Rs. 11,67,821/-. The assessment was initially processed under Section 143(1)(a) and later subjected to scrutiny under Section 143(2) and 142(1). The Assessing Officer issued notices seeking information regarding the purchase and sale of Soyabean DOC (Yellow). After considering the material, an assessment order was passed. The assessee appealed to the CIT(Appeals), which was partly allowed. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal. The assessee has now filed a Tax Appeal before the High Court challenging the ITAT's order dated 28.11.2006.

Held

The High Court held that the substantial question of law framed at the time of admitting the appeal was squarely covered by the High Court's own previous decisions rendered in Tax Appeals No. 481 of 1999 and 482 of 1999, which were followed in Tax Appeal No. 73/2002. The Court referred to paragraphs 11 and 12 of the judgment in Tax Appeal No. 73 of 2002, stating that no other view could be taken than the one taken by the Division Bench. Consequently, the appeal was dismissed, and the question was answered in favour of the Revenue and against the assessee. The High Court granted a certificate of fitness to the assessee to carry the matter before the Apex Court due to differing views expressed by various High Courts on the subject. No order as to costs was made.

Key Issues

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that expenditure on the issue of convertible debentures is a capital expenditure? (Question of law) Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court, other than that the matter is covered by previous decisions of the High Court. However, the framing of the substantial question of law indicates the assessee's position that the expenditure on convertible debentures should not be treated as capital expenditure. Revenue's Contention: The judgment does not record any specific arguments made by the revenue before the High Court.