COMMISSIONER OF INCOME TAX vs. ARVIND MILLS LTD.

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ITR/14/1994HC GujaratGJHC24020092199408 November 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The High Court answered the reference as follows: 1. On the issue of 'tebilised royalty' (Question 1), the Court followed its own decision in CIT vs. Ashoka Mills Ltd., 218 ITR 526, which held such payments to be revenue expenditure. Therefore, the Tribunal was right in deleting the addition, and the answer was in the affirmative, favouring the assessee. 2. Regarding Travelling Expenses (Question 2), the parties pointed out a similar question decided in favour of the revenue in Income-tax Reference No. 54 of 1988 decided on 6.2.2001. Following this precedent, the Court answered in the negative, favouring the revenue. 3. For the provision on redemption of Debentures (Question 3), the Court relied on the Supreme Court's decision in Madras Industrial Investment Corporation Ltd. vs. CIT, 225 ITR 802, which was in favour of the assessee. Consequently, the answer was in the affirmative, favouring the assessee. The reference was disposed of with no order as to costs.

What were the facts?

This case concerns an Income Tax Reference filed by the revenue against an order of the Income-tax Appellate Tribunal (ITAT) for the assessment year 1985-86. The ITAT had deleted certain additions made by the Assessing Officer. The additions in dispute relate to Rs. 2,59,836/- for 'tebilised royalty', Rs. 18,891/- on account of Travelling Expenses, and Rs. 3,60,000/- claimed by the assessee for provision on redemption of debentures. The High Court of Gujarat at Ahmedabad was asked to provide its opinion on these matters.

What were the issues?

The High Court was asked to decide three questions of law and fact, referred by the ITAT at the instance of the revenue: 1. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 2,59,836/- for tebilised royalty? 2. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 18,891/- made on account of Travelling Expenses? 3. Whether the Appellate Tribunal is right in law and on facts in allowing the claims of the assessee for Rs. 3,60,000/- on account of provision on redemption of Debentures? The revenue, represented by Mr. Akil Kureshi, sought to challenge the ITAT's deletions. The assessee, Arvind Mills Ltd., represented by Mr. Manish J Shah, supported the ITAT's findings. The judgment does not record specific arguments from either side for each issue, but rather refers to prior decisions of the High Court and the Supreme Court.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 14 of 1994

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 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 Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus ARVIND MILLS LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 14 of 1994 MR AKIL KURESHI with MR MANISH R BHATT for Petitioner MR MANISH J SHAH for Respondent

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA

Date of decision: 08/11/2001

ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH)

In this reference at the instance of the revenue, the following questions have been referred by the Income-tax Appellate Tribunal, Ahmedabad for our opinion in respect of assessment year 1985-86 :-

"(1) Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.2,59,836/- for tebilised royalty ?"

(2) Whether the Appellate Tribunal is right in law and on facts in deleting addition of Rs.18,891/- made on account of Travelling Expenses ?"

(3) Whether the Appellate Tribunal is right in law and on facts in allowing the claims of the assessee for Rs.3,60,000/on account of provision on redemption of Debentures ?"

2.

We have heard Mr Akil Kureshi, learned counsel for the revenue and Mr Manish J Shah, learned counsel for the respondent-assessee.

3.

As far as question No. 1 is concerned, our "Tebilised" was revenue expenditure. Following the said decision, our answer to question No. 1 is in the affirmative i.e. in favour of the assessee and against the revenue.

4.

As far as question No. 2 is concerned, the learned counsel for the parties point out that similar question has been decided in favour of the revenue in Income-tax Reference No.54 of 1988 decided on 6.2.2001. sundar/-

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