COMMISSIONER OF INCOME TAX vs. SUHRID S SARABHI

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ITR/151/1991HC GujaratGJHC24013384199101 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 favor of the assessee and against the revenue. This decision was based on the submission that this Court had already decided similar legal issues in I.T.R. No. 4/1992 by its order dated July 1, 2003, in favor of the assessee. Regarding the second question concerning the interest deficit, the Court declined to answer it. The reasoning was that the Tribunal's conclusion appeared to be based on the facts of another case (C.I.T. Vs. Mrinalini V. Sarabhai) and lacked independent findings on the specific facts of the assessee's case for the relevant assessment year. Therefore, the Court was not in a position to answer the 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 pertains to assessment year(s) not explicitly stated in the judgment. The dispute centers on the disallowance of office expenses and interest deficit by the Income Tax Officer (ITO) under Section 40-A(3) of the Income Tax Act, 1961, which was subsequently allowed by the Tribunal. The High Court of Gujarat at Ahmedabad is hearing the reference under Section 256(1) of the Act. The procedural history involves the revenue preferring this reference to the High Court after the Tribunal's decision.

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)? The revenue contended that the Tribunal erred in allowing these expenses. The assessee, represented by Shri R.K. Patel, argued in favor of the Tribunal's decision. For the first question, both sides submitted that similar legal issues had been decided by this Court in I.T.R. No. 4/1992 in favor of the assessee. For the second question, the revenue argued that the Tribunal's decision was based on the facts of another case (C.I.T. Vs. Mrinalini V. Sarabhai, I.T.A. No. 1870/Ahd/1986) without independent findings on the assessee's specific facts.

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 151 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 SUHRID S SARABHI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 151 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 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 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, 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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