COMMISSIONER OF INCOME TAX vs. MATANGI INDUSTRIES

TAXAP/740/2006HC GujaratGJHC24037726200610 December 2014Author: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER4 pages
AI SummaryDismissed

Facts

The Commissioner of Income Tax (the appellant/revenue) filed an appeal before the High Court of Gujarat challenging the order dated July 5, 2005, passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 1907/Ahd/1999 for Assessment Year 1996-97. The ITAT's order was in favor of Matangi Industries (the respondent/assessee). The appeal was admitted by the High Court, which framed substantial questions of law. The respondent/assessee was served but did not appear before the High Court.

Held

The High Court held that both substantial questions of law framed at the time of admission have already been answered by the Hon'ble Apex Court. For the first question, concerning the exclusion of sales tax and excise duty from turnover for Section 80HHC deduction, the High Court referred to the Apex Court's decision in Commissioner of Income Tax v. Lakshmi Machine Works (290 ITR 667) and held that the Tribunal was correct. Therefore, the first question was answered against the revenue and in favor of the assessee. For the second question, concerning the exclusion of job charges, the High Court referred to the Apex Court's decision in ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income Tax (343 ITR 89) and held that the Tribunal was correct in restoring the issue and in its direction regarding the exclusion of net job charges. Both questions were answered in the affirmative. The appeal was dismissed.

Key Issues

The High Court had to decide two substantial questions of law: 1. Whether the ITAT was right in directing the exclusion of sales tax and excise duty while computing the total turnover for the purpose of calculating deduction under Section 80HHC of the Income Tax Act. 2. Whether the ITAT was right in restoring the issue regarding the exclusion of 90% of job charges from the profits of business for the purpose of calculating deduction under Section 80HHC, and also holding that if job charges are to be excluded, only net job charges should be excluded. Arguments presented: Assessee: Not recorded as none appeared. Revenue: The appellant (revenue) argued that the ITAT erred in its directions regarding the exclusion of sales tax and excise duty from turnover and the treatment of job charges for Section 80HHC deduction.

Sections Cited

Section 80HHC

AI-generated summary — verify with the full judgment below

O/TAXAP/740/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 740 of 2006

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus MATANGI INDUSTRIES....Opponent(s) ================================================================ Appearance: MR.VARUN K.PATEL, ADVOCATE for the Appellant(s) No. 1 RULE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABL

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