COMMISSIONER OF INCOME TAX vs. MANORAMA SARABHAI

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ITR/147/1991HC GujaratGJHC24013380199101 July 2003Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE A.M.KAPADIA3 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court addressed the two questions referred by the Revenue. Regarding the first question concerning the allowance of office expenses disallowed by the ITO under Section 40-A(3), the Court noted that similar legal issues had been decided by the High Court in I.T.R. No. 4/1992 in favour of the assessee. Therefore, the Court answered this question in the affirmative, meaning in favour of the assessee and against the Revenue. For the second question concerning the allowance of interest deficit disallowed by the ITO under Section 40-A(3), the Court observed that the Tribunal's order did not contain independent findings on this specific legal issue. Instead, the Tribunal had relied on its earlier order in the case of C.I.T. Vs. Mrinalini V. Sarabhai. The Court found that the conclusion was based on the facts of another case, and without a discussion of the facts pertaining to the present assessee for the relevant assessment year, the Court was not in a position to answer the question. Consequently, the Court declined to answer the second question. The reference was disposed of with no order as to costs.

What were the facts?

This case involves an Income Tax Reference filed by the Revenue against an order of the Income-tax Appellate Tribunal, Ahmedabad Bench-A. The reference was made under Section 256(1) of the Income-tax Act, 1961. The assessee is Manorama Sarabai. The specific assessment year(s) are not explicitly stated but are implied to be those for which the Tribunal passed the order under challenge. The dispute revolves around the disallowance of office expenses and interest deficit by the Income Tax Officer (ITO) under Section 40-A(3) of the Act, which was subsequently allowed by the Tribunal. The High Court is deciding on two questions of law referred by the Revenue.

What were the issues?

The Tribunal had to decide two questions of law referred by the Revenue under Section 256(1) of the Income-tax Act, 1961: 1. Whether the Appellate Tribunal is right in law and on facts in allowing office expenses disallowed by the ITO under Section 40-A(3)? 2. Whether the Appellate Tribunal is right in law and on facts in allowing interest deficit disallowed by the ITO under Section 40-A(3)? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue, represented by Shri Tanvish Bhatt, sought to challenge the Tribunal's decision allowing office expenses and interest deficit that were disallowed by the ITO under Section 40-A(3). For the first question, the Revenue acknowledged that similar legal issues had been decided by the High Court in I.T.R. No. 4/1992 in favour of the assessee. For the second question, the Revenue pointed out that the Tribunal's finding was based on an earlier order in the case of C.I.T. Vs. Mrinalini V. Sarabhai, without independent findings on the facts of the present assessee's case.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 40-A(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 147 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE A.R.DAVE 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?

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus MANORAMA SARABHAI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 147 of 1991 MR TANVISH BHATT for Petitioner No. 1 MR RK PATEL for Respondent No. 1

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

CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE A.M.KAPADIA

Date of decision: 01/07/2003

ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE)

1.

At the instance of the revenue, the following two questions, arising out of the order passed by the Income-tax Appellate Tribunal, Ahmedabad Bench-A, have been referred to this Court under the provisions of Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the "Act").

(1) "Whether, the Appellate Tribunal is right in law and on facts in allowing office expenses disallowed by the I.T.O. U/s.40-A(3)?"

(2) "Whether, the Appellate Tribunal is right in law and on facts in allowing interest deficit disallowed by the ITO U/s. 40-A(3)?"

2.

Standing Counsel Shri Tanvish Bhatt has appeared for the applicant-revenue whereas learned advocate Shri R.K. Patel has appeared for the respondent-assessee.

3.

So far as question no.1, is concerned it has been submitted by the learned advocates that in I.T.R. No. 4/1992, similar legal issues had arisen and the said I.T.A. No. 1870/Ahd/1986 and by placing reliance upon the findings of the said order, the Tribunal had come to a particular conclusion. In our opinion, as the conclusion arrived at by the Tribunal is based on the facts of another case, in absence of the discussion regarding the facts of the case of the assessee for the relevant assessment year, we would not be in a position to answer the question and, therefore, we decline to answer the second question.

The reference stands disposed of with no order as to costs.

(A.R. DAVE,J.)

(A.M. KAPADIA,J.)

siji

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