KAIRA DIST CO.OP MILK PRODUCERUNION vs. COMMISSIONER OF INCOME-TAX

ITR/7/1990HC GujaratGJHC24013194199004 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
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What did the High Court hold?

The High Court, per Mr. Justice D.A. Mehta, referred to its earlier decision in Income Tax Reference No. 32 of 1987 between the same parties, dated 02/07/2001. Following that decision, all three questions referred to the High Court were answered in the negative, meaning they were answered in favour of the assessee and against the revenue. The Court held that the Income Tax Appellate Tribunal was not right in its interpretation and application of Section 35-C of the Act. Consequently, the assessee was entitled to the deduction of the entire expenditure incurred under Section 35-C. The operative direction was that the reference stands disposed of accordingly, with no order as to costs.

What were the facts?

This case involves an Income Tax Reference filed by the assessee, Kaira Dist. Co-op. Milk Producer Union, against the Commissioner of Income-tax. The reference was made under Section 256(2) of the Income Tax Act, 1961, at the instance of the assessee, following a decision by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B'. The core of the dispute revolves around the eligibility of certain expenditures for weighted deduction under Section 35-C of the Income Tax Act. The specific amount in dispute is Rs. 57,39,360/-, which the assessee claimed as eligible for weighted deduction.

What were the issues?

The Tribunal had to decide three questions of law referred by the assessee: 1. Whether, on the facts and in the circumstances of the case, the appellate Tribunal was right in its interpretation and application of section 35-C of the I.T.Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire expenditure of Rs. 57,39,360/- was not eligible for weighted deduction u/s. 35-C of the Income-tax Act? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that only 10% of the expenses incurred on dissemination of information or demonstration of modern techniques and methods of agricultural annual husbandry or dairy or poultry farming or advice on such technique or method is eligible for deduction u/s. 35-C of the I.T.Act? The assessee contended that the Tribunal's interpretation and application of Section 35-C were incorrect. The revenue's contentions are not explicitly recorded in the provided judgment, beyond the fact that the reference was made at the assessee's instance against the Tribunal's order.

Which sections of the Income-tax Act were involved?

Section 35-C,Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 7 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?

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

The order continues below.

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