COMMISSIONER OF INCOME TAX vs. ARUNODAYA MILLS LTD.

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ITR/185/1990HC GujaratGJHC24013371199030 June 2003Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE A.M.KAPADIA3 pages
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What did the High Court hold?

The High Court, considering the submissions of both the revenue and the assessee, noted that the controversy had been resolved in a prior judgment of the High Court dated November 7, 2001, delivered in the case of the assessee for the assessment year 1984-85. Applying the law laid down in that precedent, the Court answered both referred questions in the affirmative, meaning in favour of the assessee and against the revenue. The reasoning was based on the established legal position from the previous decision concerning the same assessee. The reference was disposed of accordingly, with no order as to costs. The operative direction was to answer the questions in favour of the assessee.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax against Arunodaya Mills Ltd. The reference pertains to the assessment year 1983-84. The core issue revolves around a contribution of Rs. 5,000 received by the assessee trust from Arunodaya Mills Ltd., Morvi. The Income-tax Appellate Tribunal had previously held that this contribution was not in the nature of revenue receipt but a voluntary contribution, thus falling outside the scope of taxable income. The revenue has challenged this finding by referring specific questions of law to the High Court.

What were the issues?

The High Court was asked to decide two questions of law at the instance of the revenue: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the contribution of Rs. 5,000 received by the assessee trust from Arunodaya Mills Ltd., Morvi was not in the nature of revenue receipt and a voluntary contribution which fell outside the scope of income liable to tax under the provisions of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in treating the contribution of Rs. 5,000/- by Arunodaya Mills Ltd. as a capital receipt and not the revenue income of the assessee? Both sides submitted that the controversy had already been resolved in a previous judgment concerning the assessee itself for the assessment year 1984-85. The revenue relied on the provisions of the Income-tax Act, 1961. The assessee relied on the previous High Court judgment in its own case.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 185 of 1990

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 ARUNODAYA MILLS LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 185 of 1990 MR MANISH R BHATT for Petitioner No. 1 MR PRANAV G DESAI 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: 30/06/2003

ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE)

At the instance of the revenue, the following questions have been referred to this Court by the Income-tax Appellate Tribunal, Ahmedabad Bench - A under the provisions of Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act").

1.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the contribution of Rs.5,000/received by the assessee trust from Arunodaya Mills Ltd., Morvi was not in nature of revenue receipt and a voluntary contribution which fell outside the scope of income liable to tax under the provisions of Income-tax Act, 1961?

2.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in treating the contribution of Rs.5,000/- by Arunodaya Mills Ltd. as the capital receipt and not the revenue income of the assessee?

Standing Counsel Shri P.G. Desai has appeared for the applicant-revenue whereas learned advocate Shri B.D. Karia has appeared for the respondent-assessee.

The learned advocates have submitted that the controversy involved in this reference has already been resolved in the case of the assessee itself. They have drawn our attention to the judgement dated 7th November, 2001 delivered in the case of the assessee which relates to the assessment year 1984-85 in Income Tax Reference No. 92/1995 whereas the controversy involved in this reference is for the assessment year 1983-84. Looking to the law laid down by this Court in the case of the assessee for the assessment year 1984-85, we answer both the questions in the affirmative i.e. in favour of the assessee and against the revenue.

The Reference stands disposed of with no order as to costs.

(A.R. DAVE,J.)

(A.M.KAPADIA,J.)

siji

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