COMMISSIONER OF INCOME TAX vs. STAR STEEL PVT.LTD.

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ITR/155/1991HC GujaratGJHC24013388199104 September 2003Author: HONOURABLE MR. JUSTICE D.H.WAGHELA,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was right in law in holding that the Assessing Officer was not justified in withdrawing the relief of Rs. 7685/- under Section 80J. The reasoning was that there was no transfer of Plant & Machinery, which was the basis for the ITO's action. The Court referred to its separate judgment delivered on the same day in Income Tax Reference No. 156 of 1991 for Assessment Year 1977-78, stating that the facts and contentions were the same. The ratio decidendi is that relief under Section 80J, once granted and brought forward, cannot be withdrawn under Section 154 without a valid basis, such as the transfer of Plant & Machinery, and that the action for a subsequent year cannot be a consequence of an unjustified action in a prior year. The question referred to the High Court was answered in the affirmative, in favour of the assessee and against the revenue. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

The assessee is Star Steel Pvt. Ltd. and the revenue is the Commissioner of Income Tax. The assessment year in question is 1980-81. The order under challenge is an order passed by the Income Tax Officer (ITO) under Section 154, dated March 31, 1984, wherein the ITO withdrew a relief of Rs. 7685/- under Section 80J, which had been brought forward to be set off against the income of the assessment year 1980-81. This withdrawal was a consequence of an action taken by the ITO for Assessment Year 1977-78 under Section 155(4A). The Income Tax Appellate Tribunal (ITAT) had set aside the ITO's order. The High Court is hearing a reference from the ITAT.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in setting aside the order passed under Section 154, wherein the ITO had withdrawn the relief of Rs. 7685/- under Section 80J, which had been brought forward for being set off against the income of the present assessment year (Assessment Year 1980-81)? This question turns on the interpretation and application of Section 80J and Section 154 of the Income Tax Act, 1961, and involves mixed questions of law and fact. Assessee's Contention: The judgment does not explicitly record the assessee's contentions, but it implies that the assessee would have argued that the withdrawal of the relief was unjustified. Revenue's Contention: The revenue, through its learned Sr. Standing Counsel, conceded that the question for Assessment Year 1980-81 was consequent to a similar question for Assessment Year 1977-78, and that the basic controversy remained the same. The revenue did not present separate arguments for this year, relying on the outcome of the related appeal.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 80J,Section 154,Section 155(4A)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 155 of 1991

For Approval and Signature:

HON'BLE MR.JUSTICE D.H.WAGHELA 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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus STAR STEEL PVT.LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 155 of 1991 MR TANVISH U BHATT for Petitioner No. 1 SERVED BY RPAD - (N) for Respondent No. 1

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

CORAM : HON'BLE MR.JUSTICE D.H.WAGHELA and HON'BLE MR.JUSTICE D.A.MEHTA

Date of decision: 04/09/2003

ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE D.A.MEHTA)

1.

The following question has been referred to us by the Income Tax Appellate Tribunal, Ahmedabad Bench "B" under Section 256(1) of the Income Tax Act, 1961 (for short 'the Act'), at the instance of the Commissioner of Income Tax.

"Whether, the Appellate Tribunal is right in law and on facts in setting aside the order passed u/s. 154 wherein the I.T.O. had withdrawn the relief of Rs.7685/- under section 80J which had been brought forward for being set off against the income of the present assessment year ?".

2.

The Assessment Year is 1980-81. The Assessing Officer vide order under Section 154 dated 31-03-1984 withdrew the relief under Section 80J of the Act amounting to Rs.7685 as a consequence of his action for A.Y. 1977-78 under Section 155(4A) of the Act.

3.

It was fairly stated by Mr.M.R.Bhatt, learned Sr. Standing counsel on behalf of the applicant revenue, that the question referred for the assessment year under reference is consequent to the question referred in the assessee's own case for A.Y. 1977-78 i.e. I.T.R. No.156 of 1991. 4. In light of the fact that we have upheld the order of the Tribunal for A.Y. 1977-78 today by a separate judgement, it is not necessary for us to set out facts and contention in detail, as the basic controversy remains the same. The Tribunal's order, both for Assessment Years 1977-78 and 1980-81, is a common order dated 22-05-1990. 5. For the reasons stated in our judgement delivered today in I.T.R. No.156 of 1991, we hold that the Tribunal was right in law in holding that the Assessing officer was not justified in withdrawing relief of Rs.7685/= under Section 80J of the Act as there was no transfer of Plant & Machinery.

6.

The question referred to us is answered in the affirmative i.e. in favour of the assessee and against the revenue. The reference stands disposed of accordingly. There shall be no order as to costs. [ D.H.WAGHELA,J ] [ D.A.MEHTA, J ]

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'Bhavesh'

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