C S HOTELS PVT LTD vs. COMMISSIONER OF INCOME TAX

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ITR/231/1991HC GujaratGJHC24013464199111 February 2004Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE A.M.KAPADIA2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court declined to answer the question referred for its opinion. The reasoning was that the reference was made at the instance of the assessee in 1991, but neither a paper book was filed nor did anyone appear for the assessee when the matter was called for hearing. Consequently, the Court found itself unable to proceed with deciding the substantial question of law. The operative direction was that the reference stands disposed of for want of prosecution. No finding was reached on the merits of whether the director's accounts constituted "deposits" under Section 40A(8) or on the disallowance of interest.

What were the facts?

This is an Income Tax Reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the petitioner assessee, C S HOTELS PVT LTD. The reference pertains to the assessment year 1982-83. The question referred for opinion concerns whether amounts in the directors' accounts were considered "deposits" under Section 40A(8) of the Income Tax Act, leading to a disallowance of 15% interest. The reference was made in 1991. When called for hearing, no one appeared for the petitioner assessee, despite being served. The revenue was represented by Mr. Manish R. Bhatt, learned standing counsel.

What were the issues?

The Tribunal had to decide one question of law: Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the amounts in the accounts of the directors are "deposits" within the meaning of section 40A(8) of the Income Tax Act and, therefore, were liable to disallowance at 15% of interest on such accounts? The assessee's contention was that the amounts in the directors' accounts were not "deposits" within the meaning of Section 40A(8), thus not liable for disallowance. The revenue's contention, as implied by the question referred, was that these amounts constituted "deposits" and were subject to disallowance under Section 40A(8). No specific authorities, circulars, or precedents were recorded as being relied upon by either side in the judgment provided.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 40A(8)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 231 of 1991

For Approval and Signature:

HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE A.M.KAPADIA

============================================================ 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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

-------------------------------------------------------------- C S HOTELS PVT LTD Versus COMMISSIONER OF INCOME TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 231 of 1991 NOTICE SERVED for Petitioner No. 1 MR MANISH R BHATT for Respondent No. 1

--------------------------------------------------------------

CORAM : HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE A.M.KAPADIA

Date of decision: 11/02/2004

ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE M.S.SHAH)

In this reference under Section 256 (1) of the Income-tax Act, 1961 at the instance of the petitioner assessee, the following question was referred for our opinion in respect of the assessment year 1982-83:-

"Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the amounts in the accounts of the directors are "deposits" within the meaning of section 40A(8) of the Income Tax Act and, therefore, was liable to disallowance at 15% of interest on such accounts?"

When the reference is called out for hearing, none appears for the petitioner assessee though served. Mr. Manish R. Bhatt, learned standing counsel appears for the revenue.

Though the reference was made at the instance of the assessee in the year 1991, neither paper book is filed nor any one appears for the assessee. Hence we decline to answer the question referred for our opinion.

The reference accordingly stands disposed of for want of prosecution.

(M.S. Shah, J.)

(A.M. Kapadia, J.) --- (karan)

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