OFISADE PVT LTD vs. COMMISSIONER OF INCOME-TAX

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ITR/124/1991HC GujaratGJHC24013357199116 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Tribunal was correct in upholding the order of the Commissioner of Income-Tax under Section 263 of the Income Tax Act, which directed the withdrawal of investment allowance. The reasoning was based on the principle that the same principles applicable for the withdrawal of development rebate on the transfer of an undertaking as a going concern also apply to investment allowance. The court followed its own decision in Kalindi Investment P. Ltd vs. CIT, 213 ITR 207, and another related reference. Therefore, the court answered the question in the affirmative, in favour of the revenue and against 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 assessee, OFISADE PVT LTD, against the Commissioner of Income-Tax for the assessment year 1978-79. The reference was pending for over 10 years. The core issue revolved around the withdrawal of investment allowance granted to the assessee company. The Commissioner of Income-Tax, under Section 263 of the Income Tax Act, had directed the Income Tax Officer (ITO) to withdraw this allowance. The assessee's contention was that the allowance should not be withdrawn as the company had transferred and assigned its entire undertaking and business as a going concern. The High Court of Gujarat took up the reference for final disposal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT under Section 263 of the I.T. Act directing the ITO to withdraw the investment allowance, even though the assessee company had transferred and assigned the whole undertaking and business as a going concern? Assessee's Contention: The assessee argued that the investment allowance should not be withdrawn because the company had transferred and assigned its entire undertaking and business as a going concern. No specific authorities or precedents were mentioned in the judgment for the assessee's argument. Revenue's Contention: The revenue, through its counsel, requested the court to take up the reference for final disposal due to the long pendency and a direct decision of the High Court on the matter. The revenue relied on the decision in Kalindi Investment P. Ltd vs. CIT, 213 ITR 207, which was also followed in another Income Tax Reference No. 58 of 1989.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 124 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?

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 -------------------------------------------------------------- OFISADE PVT LTD Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 124 of 1991 MR RK PATEL for Petitioner No. 1 MR MIHIR JOSHI 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 M.S.SHAH) Mr Mihir Joshi learned counsel for the revenue makes a specific request that since this reference is pending for the last about 10 years and more particularly, since the controversy raised in this reference is concluded by a direct decision of this Court, this Bench may take up this reference for final disposal, notwithstanding the fact that one of us (Mr. D.A. Mehta,J) had appeared for the respondent-assessee at the hearing of the appeal before the Income Tax Appellate Tribunal.

In view of the above request, we take up this reference for final disposal.

2.

In this reference at the instance of the assessee, the following question has been referred for our opinion in respect of assessment year 1978-79:-

"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of CIT u/s.263 of the I.T. Act directing the ITO to withdraw the investment allowance even though the assessee company had transferred and assigned the whole undertaking and business as a going concern?"

3.

We have heard Mr RK Patel learned counsel for the order of CIT u/s.263 of the Income Tax Act directing the I.T.O. to withdraw the investment allowance even though the assessee company had transferred and assigned the whole undertaking and business as a going concern.

5.

Accordingly, our answer to the question is in the affirmative i.e. in favour of the revenue and against the assessee.

6.

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

(M.S. Shah,J)

(D.A. Mehta,J)

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