KOSHALAYA INVESTMENT PVT. LTD. vs. COMMISSIONER OF INCOME-TAX

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ITR/96/1992HC GujaratGJHC24015443199213 August 2003Author: HONOURABLE MR. JUSTICE D.H.WAGHELA,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided the two referred questions. Regarding the first question, concerning the confirmation of the disallowance of interest expenditure of Rs. 1,20,960/-, the Court answered it in the affirmative and against the assessee, as the assessee did not press this issue. Consequently, for the second question, which asked whether the Tribunal was right in directing the Income-tax Officer to ignore the addition for charging interest under Section 215, the Court answered it in the negative and in favour of the department. The reasoning was that since the disallowance was upheld (implicitly, by not being pressed by the assessee), the amount could not be ignored for the purpose of calculating interest under Section 215. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

This case involves a cross-reference from the assessee, Koshalya Investments Pvt. Ltd., and the Revenue (Commissioner of Income-Tax, Gujarat-II, Ahmedabad) to the High Court of Gujarat. The reference arises from an order dated 19-11-1990 passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Year 1984-85. The core of the dispute concerns the disallowance of interest expenditure amounting to Rs. 1,20,960/- and its subsequent treatment for the purpose of charging interest under Section 215 of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and in law and under the circumstances of the case, the Tribunal is right in confirming the disallowance of interest expenditure amounting to Rs. 1,20,960/-? (Question of law) 2. Whether, on the facts and circumstances of the case, the Tribunal was right in law in directing the Income-tax Officer to ignore the addition of Rs. 1,20,960/- in the computation for charging of interest u/s. 215 of the I.T.Act, 1961? (Question of law) Assessee's Contention: The assessee, through its counsel Mr. RK Patel, did not press the first question. Revenue's Contention: The Revenue, through its counsel Mr. Manish R Bhatt, submitted that the second question must be answered in the negative as a consequence of the first question not being pressed. It was further argued that if the amount of Rs. 1,20,960/- is added to the computation of income, it cannot be ignored for charging interest under Section 215 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 215

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 96 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?

-------------------------------------------------------------- KOSHALYA INVESTMENTS PVT. LTD. Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 96 of 1992 MR RK PATEL for Petitioner No. 1 MR MANISH R BHATT for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE D.H.WAGHELA and MR.JUSTICE D.A.MEHTA

Date of decision: 13/08/2003

ORAL JUDGEMENT (Per : MR.JUSTICE D.H.WAGHELA)

1.

This cross reference made at the instance of the assessee as also the department (the Commissioner of Income Tax, Gujarat-II, Ahmedabad) has put forward the following questions arising from the order dated 19-11-1990 of the Income Tax Appellate Tribunal for Assessment Year 1984-85 :

"Whether, on the facts and in law and under the circumstances of the case, the Tribunal is right in confirming the disallowance of interest expenditure amounting to Rs.1,20,960/- ?"

AND "Whether, on the facts and circumstances of the case, the Tribunal was right in law in directing the Income-tax Officer to ignore the addition of Rs.1,20,960 in the computation for charging of interest u/s. 215 of the I.T.Act, 1961 ?"

2.

Out of the aforesaid two questions referred to this Court the first question raised at the instance of the assessee is, on instructions, not pressed by the learned counsel Mr.Patel. Evidently, as submitted by the learned counsel Mr.Bhatt appearing for the department, the second question has to be answered in the negative as the necessary consequence of the first question being not pressed. It was also submitted that upon addition of the amount of Rs.1,20,960/= in the computation of income the said amount cannot be ignored for charging of interest under Section 215 of the Income Tax Act.

3.

Accepting the above submissions, we answer the first-mentioned question in the affirmative and against the assessee and we answer the second question in the negative and in favour of the department. The reference stands answered accordingly.

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

* * * 'Bhavesh'

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