COMMISSIONER OF INCOME-TAX vs. CHEMICOAT LIMITED

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ITR/173/1986HC GujaratGJHC24010797198604 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
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What did the High Court hold?

The High Court answered the question referred to it in the affirmative, in favour of the assessee and against the Revenue. The reasoning provided is that the Tribunal had followed its own earlier order, which had been upheld by the High Court in a similar case (I.T.R. No. 260 of 1984). Therefore, the expenditure of Rs. 6,70,784/- incurred by the assessee for setting up a new unit was held to be allowable as revenue expenditure. The ratio decidendi is that if a similar issue concerning the same assessee has been decided in favour of the assessee by the High Court based on the Tribunal's order, then a subsequent reference on an identical issue should also be decided in favour of the assessee. The Court disposed of the reference accordingly, with no order as to costs.

What were the facts?

This case involves an Income Tax Reference No. 173 of 1986 before the High Court of Gujarat at Ahmedabad. The reference was made at the instance of the Revenue, Commissioner of Income-tax, against the assessee, Chemicoat Limited. The assessment year(s) are not explicitly stated. The order under challenge is a decision by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A', which allowed an expenditure of Rs. 6,70,784/- incurred by the assessee for setting up a new unit as revenue expenditure. The Revenue appeared through its advocate, Mr. B.B. Nayak, while no one appeared for the respondent-assessee, despite being served.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the expenditure incurred to the tune of Rs. 6,70,784/- by the assessee for setting up a new unit was allowable as revenue expenditure? (Question of law) Contentions: Assessee: Not recorded as no one appeared. Revenue: Submitted that the Tribunal, in deciding the appeal, followed its own earlier order in the assessee's case. This earlier order was the subject matter of I.T.R. No. 260 of 1984, where this Court had answered a similar question in the affirmative, i.e., in favour of the assessee and against the Revenue.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 173 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 CHEMICOAT LIMITED -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 173 of 1986 MR BB NAYAK FOR MR MANISH R BHATT for Applicant. NONE APPEARED for Respondent though served. -------------------------------------------------------------- CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE D.A.MEHTA Date of decision: 04/07/2001

ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE)

1.

At the instance of the Revenue, the following question has been referred to this Court for its opinion under the provisions of section 256(1) of the Income-tax Act,1961 by the Income Tax Appellate Tribunal, Ahmedabad, Bench 'A'.

"Whether on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the expenditure incurred to the tune of Rs.6,70,784/- by the assessee for setting up a new unit was allowable as revenue expenditure ?"

2.

Learned Advocate Mr.B.B.Nayak has appeared for the revenue, whereas nobody has appeared for the respondent-assessee.

3.

At the time of hearing of the Reference, it has been submitted by the learned Advocate that in the instant case; while deciding the appeal, the Tribunal had followed its own order passed in the assessee's case. It has been submitted by Mr.Nayak that earlier order was the subject matter of I.T.R.No.260 of 1984 and this Court has answered the question which is similar to one which has been referred to in the instant case in the affirmative i.e. in favour of the assessee and against the revenue.

4.

Looking to the facts of the case, even in the instant case, we answer the question referred to this Court in the affirmative i.e. in favour of the assessee and against the revenue.

5.

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

m.m.bhatt

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