COMMISSIONER OF INCOME-TAX vs. MRINALINI SARABHAI

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ITR/134/1991HC GujaratGJHC24013367199101 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 that similar legal issues concerning office expenses disallowed under Section 40-A(3) had been decided by the High Court in I.T.R. No. 4/1992, in favour of the assessee. For the second question concerning interest deficit, the Court declined to answer. The reasoning was that the Tribunal's order did not contain independent findings on the issue for the relevant assessment year. Instead, the Tribunal had relied on its own order in the assessee's case for a different assessment year (I.T.A. No. 1870/Ahd/1986). The Court found that without a discussion of the specific facts of the relevant assessment year, it was not in a position to answer the question. The reference was disposed of accordingly, 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 (Mrinalini Sarabhai) before the High Court of Gujarat. The reference arises from an order passed by the Income-tax Appellate Tribunal, Ahmedabad Bench-A. The revenue sought a reference on two specific questions of law concerning disallowances made by the Income Tax Officer (ITO) under Section 40-A(3) of the Income-tax Act, 1961. The assessment year(s) are not explicitly stated for the reference itself, but the Tribunal's order under challenge pertains to an unspecified assessment year. The procedural history involves the revenue filing the reference under Section 256(1) of the Act.

What were the issues?

The Tribunal had to decide two questions referred by the revenue: 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, represented by Ms. Mauna Bhatt, argued that the ITO's disallowances under Section 40-A(3) were justified. The assessee, represented by Mr. R.K. Patel, contended that the Tribunal's decision to allow the office expenses and interest deficit was correct. For the first question, both sides submitted that similar legal issues had arisen in I.T.R. No. 4/1992 and were decided by the High Court in favour of the assessee. Regarding the second question, the revenue argued that the Tribunal's finding was based on the facts of another assessment year and lacked independent discussion of the relevant assessment year's facts.

Which sections of the Income-tax Act were involved?

Section 40-A(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 134 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 MRINALINI SARABHAI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 134 of 1991 MS MAUNA 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 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 is concerned, upon perusal of the order passed by the Tribunal, we do not find any independent findings arrived at by the Tribunal on the said legal issue. However, it appears that the Tribunal has placed reliance on its order passed in the case of the assessee, in I.T.A. No. 1870/Ahd/1986, which was for another assessment year, and by referring to the findings arrived at in the said order, the Tribunal has come to a particular conclusion. In our opinion, as the conclusion arrived at by the Tribunal is based on the facts of another assessment year, and in absence of the discussion regarding the facts of 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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