COMMISSIONER OF INCOME-TAX vs. VEPAR

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ITR/137/1991HC GujaratGJHC24013370199101 July 2003Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE A.M.KAPADIA3 pages
AI SummaryPartly Allowed

What did the High Court hold?

Regarding the first question, the High Court noted that similar legal issues for Assessment Year 1981-82 had been decided by the Court in I.T.R. No. 4/1992 in favour of the assessee. Consequently, the Court answered the first question in the affirmative, upholding the Tribunal's decision to allow the office expenses. For the second question concerning the interest deficit, the High Court observed that the Tribunal's order did not contain independent findings. Instead, it relied on its previous decision in CIT vs. Mrinalini V. Sarabhai. The Court found that since the Tribunal's conclusion was based on the facts of another case or a different assessment year, and there was no discussion of the facts relevant to the assessment year in dispute, the Court could not gather the necessary facts. Therefore, the Court declined to answer the second question. The reference was disposed of without any 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 (ITAT), Ahmedabad Bench-A. The reference concerns assessment year 1981-82. The revenue is challenging the ITAT's decision to allow office expenses and interest deficit that had been disallowed by the Income Tax Officer (ITO) under Section 40A(3) of the Income Tax Act, 1961. The High Court of Gujarat at Ahmedabad was asked to decide two questions of law arising from the ITAT's order.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether the Appellate Tribunal is right in law and on facts in allowing office expenses disallowed by the ITO under Section 40A(3)? 2. Whether the Appellate Tribunal is right in law and on facts in allowing interest deficit disallowed by the ITO under Section 40A(3)? Arguments presented: For Question 1: Assessee: Relied on a previous decision of the High Court in I.T.R. No. 4/1992 for Assessment Year 1981-82, which was decided in favour of the assessee. Revenue: Did not present independent arguments, implicitly accepting the assessee's reliance on the prior High Court ruling. For Question 2: Assessee: The Tribunal relied on its earlier order in CIT vs. Mrinalini V. Sarabhai (I.T.A. No. 1870/Ahd/1986) to allow the interest deficit. Revenue: The revenue's contention is implicitly that the Tribunal's reliance on another case's facts without discussing the facts of the present case was incorrect.

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 137 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 VEPAR -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 137 of 1991 MR MANISH R 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.

Senior Standing Counsel Shri Manish 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 for Assessment Year 1981-82 and the said legal issues have been decided I.T.A. No. 1870/Ahd/1986 and by placing reliance upon the findings of 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 case or on the basis of another assessment year of the same assessee, in absence of the 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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