MEHSANA DISTRICT CO-OP. MILK PRODUCERS UNION LTD. vs. COMMISSIONER OF INCOME-TAX

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ITR/52/1986HC GujaratGJHC24010676198602 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 of Gujarat, per Mr. Justice A.R. Dave and Mr. Justice D.A. Mehta, decided all four referred questions. The court noted that these questions had already been answered by the same court in a previous case, ITR No. 32/87. Consequently, the court answered all four questions in the negative, which means the decision was in favour of the assessee and against the revenue. This implies that the Tribunal's interpretation and application of Section 35C, as challenged by the assessee, were found to be incorrect by the High Court, and the revenue's contention that the deduction should be limited or denied was also rejected. The operative direction was to dispose of the reference accordingly, with no order as to costs. The specific reasoning from the prior judgment (ITR No. 32/87) is not elaborated upon in this text, but the principle established is that the assessee's claim for weighted deduction under Section 35C, at least to the extent of 10% of the expenditure, is valid.

What were the facts?

This case involves an Income Tax Reference filed by both the assessee, Mehsana District Co-op. Milk Producers Union Ltd., and the revenue. The reference was made by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A', to the High Court of Gujarat under Section 256(1) of the Income-tax Act, 1961. The core of the dispute revolves around the eligibility and extent of weighted deduction claimed by the assessee under Section 35C of the Act for expenses incurred. The specific assessment years are not explicitly stated in the provided text, but the reference concerns expenditures claimed by the assessee for two years.

What were the issues?

The Tribunal had to decide four questions referred to the High Court. The questions raised by the assessee were: 1. Whether the Tribunal was correct in its interpretation and application of Section 35C of the Income-tax Act, 1961. 2. Whether the Tribunal was correct in holding that the entire expenditure claimed by the assessee for both years was not eligible for weighted deduction under Section 35C. 3. Whether the Tribunal was correct in holding that only 10% of expenses incurred on dissemination of information or demonstration of modern techniques in agriculture, animal husbandry, dairy, or poultry farming is eligible for deduction under Section 35C. The question raised by the revenue was: 4. Whether the Tribunal was correct in law and on facts in opining that relief under Section 35C should be granted at 10% of the expenditure claimed by the assessee for both assessment years. The assessee's arguments, as implied by the questions, would be that the entire or a larger portion of their claimed expenditure is eligible for weighted deduction under Section 35C. The revenue's contention, also implied, would be that the deduction should be limited or denied as per their interpretation of Section 35C. The judgment does not explicitly detail the arguments made by each side, but rather focuses on the questions referred and the court's decision.

Which sections of the Income-tax Act were involved?

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 52 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 @ MEHSANA DISTRICT CO-OP. MILK PRODUCERS UNION LTD. Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: MR JP SHAH for the Petitioner 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: 02/07/2001

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

At the instance of the assessee as well as the revenue, the following 4 questions have been referred to this court for its opinion by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A', under the provisions of sec. 256(1) of the Income-tax Act, 1961. At the instance of 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 sec. 35C of the Income-tax Act, 1961 ?

2.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that entire expenditure as claimed by the assessee for both the years under reference was not eligible for weighted deduction u/s 35C 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, animal husbandry or dairy or poultry farming or advice on such technique or method is eligible for deduction u/s 35C of the Income-tax Act?

At the instance of the revenue :

4.

Whether the Appellate Tribunal has been right in law and on facts in coming to the opinion that the relief under sec. 35C of the Income-tax Act, 1961 requires to be granted to the assessee at 10% of the expenditure as claimed by the assessee for both the assessment years in question?

2.

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

3.

The learned advocates have submitted that all the four questions which have been referred to in this reference have already been answered by this court in ITR No. 32/87. Accordingly, we answer all the questions in the negative i.e. in favour of the assessee and against the revenue.

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

(A.R. Dave, J.)

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

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