COMMISSIONER OF INCOME TAX vs. KARTIKEYA V SARABHAI

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ITR/153/1991HC GujaratGJHC24013386199101 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 decided the first question, common to both Assessment Years 1980-81 and 1981-82, in favour of the assessee. This was based on the submission by both parties that this Court had previously decided similar legal issues in I.T.R. No. 4/1992 in favour of the assessee. Therefore, the first question was answered in the affirmative, upholding the Tribunal's decision to allow office expenses. Regarding the second question for Assessment Year 1981-82 concerning interest deficit, the Court found no independent findings by the Tribunal. The Tribunal had relied on its earlier order in the case of C.I.T. Vs. Mrinalini V. Sarabhai. However, as the Tribunal's conclusion was based on the facts of another case and lacked specific discussion of the facts of the relevant assessment year, the High Court declined to answer this second question. The reference was disposed of accordingly.

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 assessment years in dispute are 1980-81 and 1981-82. The revenue is challenging the Tribunal's decision to allow office expenses and interest deficit that were disallowed by the Income Tax Officer (ITO) under Section 40A(3) of the Income-tax Act, 1961. The High Court of Gujarat at Ahmedabad heard the reference. The procedural history indicates that the questions of law were referred to the High Court under Section 256(1) of the Act at the instance of the revenue.

What were the issues?

The Tribunal had to decide the following questions of law: 1. For Assessment Year 1980-81: Whether the Appellate Tribunal was right in law and on facts in allowing office expenses disallowed by the ITO under Section 40A(3)? 2. For Assessment Year 1981-82: Whether the Appellate Tribunal was right in law and on facts in allowing office expenses disallowed by the ITO under Section 40A(3)? 3. For Assessment Year 1981-82: Whether the Appellate Tribunal was right in law and on facts in allowing interest deficit disallowed by the ITO under Section 40A(3)? Contentions: Assessee: The assessee contended that similar legal issues had arisen in I.T.R. No. 4/1992, which were decided by the High Court in favour of the assessee. Revenue: The revenue argued that the Tribunal erred in allowing the disallowed expenses and interest deficit under Section 40A(3). No specific authorities or precedents were mentioned for the revenue's arguments in the judgment.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 153 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 KARTIKEYA V SARABHAI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 153 of 1991 MR B.B.NAIK 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 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").

For Asst. Year : 1980-81:

(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)?"

For Asst. Year : 1981-82:

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

Senior Standing Counsel Shri B.B.Naik 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, which is common for Assessment Years 1980-81 & 1981-82 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 legal issues have been decided by this Court by its order dated 1st July, 2003 in favour of the assessee and against the revenue. In the circumstances, we answer the first question in the affirmative i.e. in favour of the assessee and against the revenue.

4.

So far as the second question for the Assessment Year 1981-82 is concerned, upon perusal of the order 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 any discussion regarding the facts of the relevant assessment year, we would not be in a position to gather facts of the case 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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