CALAMA PUMPS PVT. LTD. vs. COMMISSIONER OF INCOME-TAX

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ITR/116/1984HC GujaratGJHC24011790198411 November 1998Author: HONOURABLE MR. JUSTICE R.BALIA,HONOURABLE MR. JUSTICE ANIL R. DAVE2 pages
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What did the High Court hold?

The High Court held that the Tribunal was right in law in holding that the sum of Rs. 1930 was not allowable as a deduction. The reasoning followed the High Court's own decision in the assessee's own case for the preceding assessment year 1977-78, which had addressed an identical question. In that prior decision, the Court had answered the question in the affirmative, in favour of the Revenue and against the assessee. Therefore, applying the same principle, the current reference was also answered in favour of the Revenue. The operative direction was to answer the question in the affirmative, in favour of the Revenue and against the assessee. No costs were awarded.

What were the facts?

The assessee, Calama Pumps Pvt. Ltd., is challenging an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench "C", for the assessment year 1978-79. The ITAT had held that a sum of Rs. 1930 was not allowable as a deduction. The assessee contended that this amount was paid for the use of land and constituted revenue expenditure deductible under Section 37 of the Income Tax Act. However, the Assessing Officer and both appellate authorities had classified the expenditure as capital in nature, forming part of the cost of land. This issue had arisen in previous assessment years, with an identical question for assessment year 1977-78 being decided by the High Court in favour of the Revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that a sum of Rs. 1930/- or no part of it was allowable as deduction against the income of the year under consideration? (Question of law) Assessee's contentions: The amount paid was for the use of land and was revenue expenditure, deductible under Section 37 of the Income Tax Act. Revenue's contentions: The expenditure was capital in nature, forming part of the cost of land. The Assessing Officer and appellate authorities held this view. The High Court had previously decided an identical issue for assessment year 1977-78 in favour of the Revenue.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 116 of 1984

For Approval and Signature:

Hon'ble MR.JUSTICE R.BALIA. and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question 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?

-------------------------------------------------------------- CALAMA PUMPS PVT. LTD. Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: MR NR DIVETIA for Petitioner MR MANISH R BHATT for Respondent No. 1

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

CORAM : MR.JUSTICE R.BALIA. and MR.JUSTICE A.R.DAVE Date of decision: 11/11/98

ORAL JUDGEMENT

1.

At the instance of the assessee, the Income Tax Appellate Tribunal, Ahmedabad Bench "C" has submitted the statement of case and referred the following question of law arising out of its order in appeal for the assessment year 1978-79 in the case of assessee decided on 16.7.83:

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that a sum of Rs.1930/- or no part of it was allowable as deduction against the income of the year under consideration?"

2.

While the assessee has claimed that the amount paid by him during the year was for the use of land and was a revenue expenditure which had to be allowed under Section 37 of the Income Tax Act. The assessing officer as well as both the appellate authorities have held the same to be capital in nature being part of the cost of land. The question has arisen in successive years. For the assessment year preceding the one in question also identical question has been referred to this Court for its opinion in respect of like expenditure for the assessment year 1977-78 which was subject matter of Income Tax Reference No. 247 of 1982 which had been decided by this Court on 13.12.95 by answering the same in affirmative, in favour of the Revenue and against the Assessee. Following the decision rendered in assessee's own case, the question referred in this case is also answered in affirmative, that is to say, in favour of the Revenue and against the Assessee.

There shall be no order as to costs.

(Rajesh Balia, J)

(A.R. Dave, J)

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