B.K. DIST.CO.OP.MILK PRODUCERSUNION LTD. vs. COMMISSIONER OF INCOME TAX

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ITR/211/1986HC GujaratGJHC24010835198603 July 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The High Court answered the referred questions based on submissions by the learned advocates that these issues had been settled by various court decisions. For the first question, concerning the allowability of deduction under Section 80P against total income after set off of unabsorbed losses and depreciation, the Court answered in the affirmative, meaning against the assessee and in favour of the revenue. This decision was based on the law laid down by the Supreme Court in CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd., 224 ITR 604. For questions 2, 3, and 4, which related to the interpretation and application of Section 35C of the Income-tax Act, including the eligibility of expenditure and the quantum of deduction, the Court answered all three questions in the negative, meaning in favour of the assessee and against the revenue. This was in view of a judgment delivered by the same court in I.T.R. No. 32/87. The reference was disposed of accordingly with no order as to costs. No issue was expressly left undecided.

What were the facts?

This case involves an Income Tax Reference before the High Court of Gujarat at Ahmedabad, initiated at the instance of the assessee, B.K. Dist. Co.Op. Milk Producers Union Ltd. The reference was made by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C', concerning several questions of law. The assessee was represented by Mr. J.P. Shah, and the revenue by Mr. Akil Qureshi. During the hearing, both learned advocates submitted that the questions referred to the court had been settled by various court decisions during the pendency of this reference. The specific assessment years are not explicitly stated in the provided text.

What were the issues?

The Tribunal had to decide four questions of law referred by the Income Tax Appellate Tribunal at the instance of the assessee. 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the deduction under Section 80P of the Income-tax Act, 1961, should be allowed only against the total income after set off of unabsorbed business loss, unabsorbed depreciation, and unabsorbed development rebate of earlier years? The assessee contended for a deduction against gross total income, while the revenue argued for deduction against total income after prior year adjustments. 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in its interpretation and application of Section 35C of the Income-tax Act, 1961? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire expenditure of Rs. 9,20,796/- was not eligible for weighted deduction under Section 35C of the Income-tax Act? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that only 10% of the expenses incurred on dissemination of information or demonstration of modern technique or method of agriculture, animal husbandry or dairy or poultry farming or advice on such technique or method is eligible for deduction under Section 35C of the Act? For questions 2 to 4, the assessee argued for a broader interpretation of Section 35C, while the revenue contended for a narrower application. The judgment does not explicitly record arguments for each side on all questions, but rather notes that the questions were settled by other court decisions.

Which sections of the Income-tax Act were involved?

Section 80P,Section 35C,Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 211 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 @ B.K. DIST.CO.OP.MILK PRODUCERS UNION LTD. Versus COMMISSIONER OF INCOME TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 211 of 1986 MR JP SHAH for Petitioner No. 1 MR AKIL QURESHI for MR MANISH R BHATT for Respondent No. 1

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

Date of decision: 03/07/2001

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

At the instance of the assessee, the following questions have been referred to this Court for its opinion under the provisions of sec. 256(1) of the Income-tax Act, 1961 by Income Tax Appellate Tribunal, Ahmedbad Bench 'C'.

1.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the deduction u/s 80P of the I.T. Act 1961 should be allowed only against the total income after set off of unabsorbed business loss, unabsorbed depreciation and unabsorbed development rebate of the earlier years?

2.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in interpretation of application of sec. 35C of the Income-tax Act, 1961?

3.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire expenditure of Rs. 9,20,796/- was not eligible for weighted deduction u/s 35C of the I.T. Act?

4.

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that only 10% of the expenses incurred on dissemination of information or demonstration of modern technique or method of agriculture, animal husbandry or dairy or poultry farming or advice on such technique or method is eligible for deduction u/s 35C of the Act?

2.

Learned advocate Shri J.P. Shah has appeared for the assessee whereas learned advocate Shri Akil Qureshi has appeared for the revenue.

3.

At the time of hearing of the reference, the learned advocates have fairly submitted that all the questions, which have been referred to this court, have been answered by different courts during the pendency of this reference.

4.

So far as the first question is concerned, it has been submitted that the said question requires to be answered in the affirmative i.e. against the assessee and for the revenue in view of the law laid down by the Supreme Court in case of CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd., 224 ITR 604. We accordingly answer the first question in the affirmative

i.e. against the assessee and in favour of the revenue.

5.

So far as questions Nos. 2 to 4 are concerned, it has been submitted by the learned advocates that the said questions have been answered by this court in I.T.R. No. 32/87. In view of the judgment delivered in the said case, we answer all the three questions in the negative i.e. in favour of the assessee and against the revenue.

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

(A.R. Dave, J.)

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

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