COMMISSIONER OF INCOME TAX vs. NANALAL MANSUKHRAM

ITR/91/1990HC GujaratGJHC24013277199009 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was right in law in allowing the deduction of Rs. 18,522/-. The Court followed its own prior decision in the assessee's own case for assessment years 1980-81 and 1981-82 (Income Tax Reference No. 76 of 1987, decided on 28/08/2001). In that earlier decision, the Court had held that the disallowance of interest paid on amounts received from parties other than the firm's partners was not justified. Applying this precedent, the High Court concluded that the interest paid on the "Subh Accounts" during the relevant period was a deductible item of expenditure. The question referred to the Court was answered in the affirmative, in favour of the assessee. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

The Revenue (Commissioner of Income Tax) has filed an Income Tax Reference before the High Court of Gujarat at Ahmedabad, challenging an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench "A". The assessment year in question is 1982-83. The assessee, M/s. Nanalal Mansukhram, claimed a deduction of Rs. 18,522/- on account of interest paid on various charity accounts, referred to as "Subh Accounts", maintained in its books. The ITAT had allowed this deduction, following its own previous decisions for assessment years 1980-81 and 1981-82, against which the Revenue had also filed references.

What were the issues?

1. Whether the Tribunal was right in law and on facts in allowing a deduction of Rs. 18,522/- on account of interest for the assessment year 1982-83. Assessee's Contention: The assessee claimed the interest paid on "Subh Accounts" as a deductible expenditure. The ITAT had previously allowed similar claims for earlier assessment years. Revenue's Contention: The Revenue challenged the ITAT's decision to allow the deduction, leading to this reference. The specific grounds for disallowance by the Assessing Officer or CIT(A) are not detailed in the judgment, but the reference itself indicates the Revenue's disagreement with the ITAT's allowance.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 91 of 1990

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

The order continues below.

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