COMMISSIONER OF INCOME-TAX vs. N. J. METAL SCREENS MFG. PVT. LTD.

PDF · subscribers
ITR/199/1986HC GujaratGJHC24010823198604 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessee was not entitled to interest under Section 214 of the Income-tax Act, 1961, for any period, including the period subsequent to the original assessment order. This decision was based on the Supreme Court's ruling in Modi Industries Ltd. & Ors. v. C IT and anr., which did not approve the ratio of the Gujarat High Court's judgment in Bardolia Textile Mills v. ITO. The Court found it clear from the facts that the assessee could not have been awarded interest under Section 214. Consequently, both questions referred to the Court were answered in the negative, in favor of the Revenue and against the assessee. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income-tax (Revenue) against N.J. Metal Screens Mfg. Pvt. Ltd. (Assessee) at the instance of the Revenue. The Income Tax Appellate Tribunal, Ahmedabad Bench 'C', had previously ruled in favor of the assessee regarding entitlement to interest under Section 214 of the Income-tax Act, 1961. The Tribunal's decision was based on a Gujarat High Court judgment in Bardolia Textile Mills v. ITO. The Revenue has now approached the High Court under Section 256(2) of the Act, seeking an opinion on two specific questions of law arising from the Tribunal's order. The assessee was served but did not appear before the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in coming to the conclusion that the assessee was entitled to interest under Section 214 of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in coming to the conclusion that the assessee was entitled to interest under Section 214 of the Income-tax Act, 1961 for the period subsequent to the date of the original assessment order also? Assessee's Contention (as per Tribunal's prior finding): The assessee was entitled to interest under Section 214 of the Act, relying on the Gujarat High Court's decision in Bardolia Textile Mills v. ITO. Revenue's Contention: The Revenue argued that the Gujarat High Court's judgment in Bardolia Textile Mills, relied upon by the Tribunal, was not approved by the Hon'ble Supreme Court. The Revenue referred to the Supreme Court's decision in Modi Industries Ltd. & Ors. v. C IT and anr., asserting that based on this, the assessee could not have been awarded interest under Section 214. The Revenue contended that both questions should be answered in its favor.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 214

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 199 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 N. J. METAL SCREENS MFG. PVT. LTD. -------------------------------------------------------------- Appearance: MR BB NAIK for MR MANISH R BHATT for Petitioner No. 1 SERVED BY RPAD - (N) for Respondent No. 1

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)

At the instance of the revenue, the following two

questions have been referred to this court for its opinion by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' under the provisions of sec. 256(2) of the Income-tax Act, 1961 (hereinafter referred to as'the Act').

1.

Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in coming to the conclusion that the assessee was entitled to the interest u/s 214 of the I.T. Act?

2.

Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in coming to the conclusion that the assessee was entitled to interest u/s 214 of the I.T. Act for the period subsequent to the date of original assessment order also?

2.

Learned advocate Shri B.B. Naik has appeared for the applicant whereas nobody has appeared for the respondent assessee, though served.

3.

While coming to the conclusion that the assessee was entitled to interest under the provisions of sec. 214 of the Act, the tribunal had relied upon a judgment delivered by this court in case of Bardolia Textile Mills v. ITO, 151 ITR 389. The Tribunal, therefore, came to the conclusion that the assessee was entitled to interest under the provisions of sec. 214 of the Act.

4.

Learned advocate Shri Naik has drawn our attention to the fact that during pendency of the reference, the Hon'ble Supreme Court has not approved the ratio of the judgment delivered by this court in Bardolia Textile Mills (supra). He has drawn our attention to the judgment delivered by the Hon'ble Supreme Court in case of Modi Industries Ltd. & Ors. v. C IT and anr., 216 ITR 759. Looking to the facts of the case, it is very clear that the assessee could not have been awarded interest under the provisions of sec. 214 of the Act.

5.

In view of the law laid down by the Hon'ble Supreme Court in case of Modi Industries Ltd. (supra), we answer both the questions in the negative i.e. in favour of the revenue and against the assessee.

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

(A.R. Dave, J.)

(D.A. Mehta, J.) (hn)

More judgments on Section 256(2)

All 253 judgments and leading authorities on Section 256(2) →

Recent GST High Court judgments

Search GST case law →