SABARKANTHA DISTRICT CO-OP. MILK PRODUCER'S UNION LTD vs. COMMISSIONER OF INCOME-TAX

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ITR/99/1991HC GujaratGJHC24013332199116 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court, following its earlier decision in the case of Kaira District Cooperative Milk Producers' Union Ltd. vs. CIT, answered all three questions in the negative, which means in favour of the assessee and against the revenue. The Tribunal's interpretation and application of Section 35C were found to be incorrect. The holding that the entire expenditure for the specified assessment years was not eligible for weighted deduction under Section 35C was overturned. Furthermore, the Tribunal's view that only 10% of the expenses on dissemination of information or demonstration of modern techniques related to agriculture, animal husbandry, dairy, or poultry farming was eligible for weighted deduction was also set aside. The operative direction is that the reference is disposed of in favour of the assessee.

What were the facts?

The Income Tax Appellate Tribunal, Ahmedabad Bench 'B', referred three questions for the opinion of the Gujarat High Court at the instance of the assessee, Sabarkantha District Co-op. Milk Producer's Union Ltd. The assessment years involved were 1981-82, 1982-83, 1983-84, and 1984-85. The assessee is the petitioner, and the Commissioner of Income-tax is the respondent. Despite the reference being at the assessee's instance, no one appeared on their behalf. The revenue's counsel, Mr. Akil Kureshi, acknowledged that the issues were concluded in favour of the assessee by a prior decision of the same High Court.

What were the issues?

The Tribunal referred three questions for the High Court's opinion: 1. Whether, on the facts and circumstances, the Tribunal was right in its interpretation and application of section 35C of the Income-tax Act, 1961? 2. Whether, on the facts and circumstances, the Tribunal was right in holding that the entire expenditure for AY 1981-82 (Rs. 18,80,407), AY 1982-83 (Rs. 22,52,310), AY 1983-84 (Rs. 22,55,433), and AY 1984-85 (Rs. 32,05,403) was not eligible for weighted deduction under section 35-C? 3. Whether, on the facts and circumstances, the Tribunal was right in law in holding that only 10% of the expenses incurred on dissemination of information or demonstration of modern techniques and methods of agricultural, animal husbandry, dairy, or poultry farming, or advice on such techniques or methods, is eligible for weighted deduction under section 35C? Assessee's Contentions: Not recorded as no appearance was made. Revenue's Contentions: The revenue's counsel conceded that the issues were concluded in favour of the assessee by this Court's decision in Income Tax Reference No. 32 of 1987 in the case of Kaira District Cooperative Milk Producers' Union Ltd. vs. CIT.

Which sections of the Income-tax Act were involved?

35C

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 99 of 1991

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?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

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?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- SABARKANTHA DISTRICT CO-OP. MILK PRODUCER'S UNION LTD Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 99 of 1991 NOTICE SERVED for Petitioner No. 1 MR AKIL KURESHI with MR MANISH R BHATT for Respondent No. 1

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

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

Date of decision: 16/10/2001

ORAL JUDGEMENT

(Per : MR.JUSTICE D.A.MEHTA) The Income Tax Appellate Tribunal, Ahmedabad Bench `B' has referred the following three questions for the opinion of this Court at the instance of the assessee. The assessment years involved are 1981-82, 1982-83, 1983-84 and 1984-85. (i) "Whether, on the facts and circumstances of the case, the Tribunal was right in its interpretation and application of section 35C of the Income-tax Act, 1961 ?"

(ii) "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire expenditure of Rs.18,80,407/- for A.Y. 1981-82, Rs.22,52,310/for A.Y. 1982-83, Rs.22,55,433/- for A.Y. 1983-84 and Rs.32,05,403/- for A.Y. 1984-85 was not eligible for weighted deduction under section 35-C?"

(iii) "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that only 10% of the expenses incurred on dissemination of information or demonstration of modern techniques and the methods of agricultural, animal husbandry or dairy or poultry farming or advice on such technique or methods, is eligible for weighted deduction u/s.35C of the Act ?"

Though the reference is at the instance of the assessee, none appears on behalf of the assessee. However, Mr. Akil Kureshi learned counsel for the revenue very fairly pointed out that the issue raised by the three questions stands concluded in favour of the assessee by decision of this Court rendered on 2nd July, 2001 in Income Tax Reference No.32 of 1987 in the case of Kaira District Cooperative Milk Producers' Union Ltd. vs. CIT.

Following the aforesaid decision, all the three questions referred to us are answered in the negative i.e. in favour of the assessee and against the revenue.

The Reference is disposed of accordingly with no order as to costs.

(M.S. Shah,J)

(D.A. Mehta,J)

zgs/-

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