COMMISSIONER OF INCOME-TAX vs. SHAH ENGINEERING CO.

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ITR/197/1986HC GujaratGJHC24010821198605 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered both questions in the negative, ruling against the assessee and in favour of the revenue. For the first question, the Court held that the assessee firm was not an industrial undertaking and therefore not entitled to investment allowance under Section 32A(2)(b)(iii) of the Income-tax Act, 1961. This decision was based on the concluding nature of the Supreme Court judgments cited. Similarly, for the second question, the Court held that tractors and trailers were not eligible for investment allowance under Section 32A. This answer was given in light of the specific findings of fact recorded by the Tribunal in this particular case, and also influenced by the Apex Court's pronouncements. The ratio decidendi is that the definition of 'industrial undertaking' and the eligibility of specific assets for investment allowance are governed by established Supreme Court precedents, which the High Court followed.

What were the facts?

This case involves an Income Tax Reference No. 197 of 1986 before the High Court of Gujarat at Ahmedabad. The Commissioner of Income-tax (Revenue) is the applicant, and Shah Engineering Co. (Assessee) is the respondent. The reference was made by the Income-tax Appellate Tribunal, Ahmedabad Bench 'A', concerning two questions of law. The core of the dispute revolves around the assessee's eligibility for investment allowance under Section 32A of the Income-tax Act, 1961. The High Court notes that the controversy is concluded by Supreme Court decisions in Commissioner of Income-tax Vs. N.C.Budheraja & Co. and Builders Association of India Vs. Union of India & Others.

What were the issues?

The Tribunal was asked to decide two questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee firm is an industrial undertaking and hence entitled to investment allowance under Section 32A(2)(b)(iii) of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law holding that tractors and trailers were eligible for investment allowance under Section 32A of the Income-tax Act, 1961? The Revenue contended that the assessee firm was not an industrial undertaking and that tractors and trailers were not eligible for investment allowance. The judgment does not explicitly record the assessee's contentions but implies they argued in favour of their eligibility for the allowance, likely relying on the Tribunal's initial finding. The judgment states that the controversy is concluded by Apex Court decisions, suggesting these decisions formed the basis for the arguments and the eventual ruling.

Which sections of the Income-tax Act were involved?

Section 32A,Section 32A(2)(b)(iii),Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 197 of 1986

For Approval and Signature:

Hon'ble MR.JUSTICE A.R.DAVE 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 SHAH ENGINEERING CO. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 197 of 1986 MR BB NAYAK FOR MR MANISH R BHATT for Applicant. MR NR DIVETIA for Respondent No. 1

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

CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE D.A.MEHTA

Date of decision: 05/07/2001

ORAL JUDGEMENT

(Per : MR.JUSTICE D.A.MEHTA)

1.

The Income-tax Appellate Tribunal, Ahmedabad, Bench 'A' has referred the following two questions u/s.256(2) of the Act for our opinion :

"

1.

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee firm is an industrial undertaking and hence entitled to investment allowance u/s.32A(2) (b) (iii) of the Income-tax Act,1961 ?

2.

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law holding that tractors and trailers were eligible for investment allowance under section 32A of the Income-tax Act,1961 ?"

2.

It is not necessary for us to set out the facts in detail as it is common ground between the parties that the controversy is concluded by the Apex Court in the case of Commissioner of Income-tax Vs. N.C.Budheraja & Co., reported in 204 I.T.R.412 and in the case of Builders Association of India Vs. Union of India & Others, reported in 209 I.T.R.877. 3. We, therefore, answer the first question in the negative i.e. against the assessee and in favour of the revenue. The answer to second question would be also in the negative i.e. in favour of the revenue and against the assessee. We may clarify that the answer to second question is in light of the finding recorded by the Tribunal viz. the facts in this particular case.

4.

The Reference is thus disposed of accordingly with no order as to costs. (A.R.Dave, J) (D.A.Mehta,J)

m.m.bhatt

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