COMMISSIONER OF INCOME TAX vs. M/S.VYAVASAYA

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ITR/138/1991HC GujaratGJHC24013371199101 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 answered the first question in the affirmative, in favour of the assessee and against the revenue. This decision was based on the submission by both parties that this Court had already decided similar legal issues in I.T.R. No. 4/1992 by its order dated July 1, 2003, in favour of the assessee. Regarding the second question concerning the interest deficit, the Court found no independent findings by the Tribunal. The Tribunal had relied on its earlier order in C.I.T. Vs. Mrinalini V. Sarabhai. The Court held that as the Tribunal's conclusion was based on the facts of another case, and in the absence of a discussion regarding the facts of the assessee's case for the relevant assessment year, the Court was not in a position to answer the question and therefore declined to answer it. 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 (Commissioner of Income Tax) against the assessee, M/s. Vyavasaya. The reference arises from an order passed by the Income-tax Appellate Tribunal, Ahmedabad Bench-A. The revenue sought reference to the High Court under Section 256(1) of the Income-tax Act, 1961, on two specific questions of law. The High Court of Gujarat at Ahmedabad heard the reference. The assessment years are not explicitly stated in the judgment. The dispute concerns the disallowance of office expenses and interest deficit by the Income Tax Officer (ITO) under Section 40-A(3) of the Act, which were subsequently allowed by the Tribunal.

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 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)? The revenue contended that the ITO had disallowed these expenses under Section 40-A(3). The assessee argued that the Tribunal's decision to allow these expenses was correct. For the first question, both sides agreed that similar legal issues had been decided by the High Court in another case (I.T.R. No. 4/1992) in favour of the assessee. For the second question, the revenue argued that the Tribunal's decision 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 138 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 M/S.VYAVASAYA -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 138 of 1991 MS MAUNA M. 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 Ms. Mauna 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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