COMMISSIONER OF INCOME-TAX vs. ELECON ENGINEERING CO. LTD.

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ITR/172/1992HC GujaratGJHC24015516199228 August 2003Author: HONOURABLE MR. JUSTICE D.H.WAGHELA,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court declined to answer the question referred to it. It was common ground between the parties that the reference appeared to have been made through inadvertent oversight and was not required to be answered. The Court noted that a similar question in the preceding year had been referred, but upon examination, it was found that the question in the preceding year had not been referred but specifically rejected by the Tribunal, as the decision was based on the appreciation of facts and material on record. Therefore, the High Court concluded that the present reference had been made through inadvertent omission and accordingly disposed of the reference as unanswered, with no order as to costs. The specific finding on the deletion of notional interest by the ITAT was not adjudicated upon by the High Court.

What were the facts?

The Commissioner of Income Tax (Revenue) referred a question of law to the High Court of Gujarat at Ahmedabad concerning the deletion of notional interest charged by the Income Tax Officer on interest-free loans provided by Elecon Engineering Co. Ltd. (Assessee) to its wholly owned subsidiary. The Income Tax Appellate Tribunal (ITAT) had deleted this notional interest. The High Court noted that both parties before it agreed that the reference appeared to have been made through inadvertent oversight and was not required to be answered. The Tribunal's statement of case indicated that a similar question in a preceding year had been referred. However, upon examining the statement of case for the preceding year, it was found that the question had not been referred but specifically rejected, as the Tribunal's decision was based on the appreciation of facts and material on record.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in deleting the notional interest charged by the Income Tax Officer on the interest-free loans given by the assessee company to its wholly owned subsidiary? (Question of law and fact, concerning the charging of notional interest on interest-free loans). Assessee's contention: Not recorded. Revenue's contention: The Revenue contended that the Appellate Tribunal was not right in deleting the notional interest charged by the Income Tax Officer on interest-free loans given by the assessee to its wholly owned subsidiary. The Revenue sought to have the Tribunal's decision reviewed on both facts and law.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No.172 of 1992

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 ELECON ENGINEERING CO. LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 172 of 1992 MR MANISH R BHATT for Petitioner No. 1 MR RK PATEL for Respondent No. 1

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

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

Date of decision: 28/08/2003

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

1.

The following question has been referred by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' under Section 256(1) of the Income Tax Act, 1961, at the instance of the Commissioner of Income Tax :

"Whether the Appellate Tribunal is right in law and on facts in deleting the notional interest charged by the Income Tax Officer on the interest free loans given by the assessee company to its wholly owned subsidiary? "

2.

Heard Mr.M.R.Bhatt, learned sr. standing counsel on behalf of the applicant - revenue and Mr.B.D.Karia, learned advocate on behalf of the respondent - assessee. It is common ground between the parties that the present reference seems to have been made through inadvertent oversight and it is not required to be answered.

3.

In the statement of case dated 31-10-1991 the Tribunal records that both parties before it pointed out that a reference of similar question in the preceding year in Reference Application No.568/Ahd/91 had been made and hence, the present question has been referred. Our attention has been invited to the statement of case dated 25-11-1991 in Reference Application No.568/Ahd/1991 (which is since registered as I.T.R. No.104 of 1992) and it is apparent that question No.1 therein has not been referred but has specifically been rejected as the decision of the Tribunal has proceeded on an appreciation of the relevant facts and material available on record.

4.

In the circumstances, there being no reference for the preceding year it is apparent that the present reference has been made through inadvertent omission. We, therefore, decline to answer the question referred to us.

5.

The reference stands disposed of as unanswered with no order as to costs. [D.H.WAGHELA, J] [D.A.MEHTA, J]

* * * 'Bhavesh'

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