COMMISSIONER OF INCOME TAX vs. ASHWINKUMAR GORDHANDAS & BROS

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ITR/387/1983HC GujaratGJHC24011853198302 May 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
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What did the High Court hold?

The High Court held that the Tribunal was correct in its conclusion. The Court referred to its own prior decision in the assessee's own case (CIT vs. Ashwinkumar Gordhanbhai and Brothers, reported in 212 ITR, 614), which had established that the activities pursued by the assessee amounted to "processing". Applying the ratio of that precedent, the Court found that the assessee company was indeed engaged in processing activities. Consequently, the provisions of Section 104 were not applicable to the assessee. The question referred to the Court was answered in the affirmative, favoring the assessee and against the revenue. The reference was disposed of accordingly, with no order as to costs. No issues were left undecided.

What were the facts?

The assessee, Ashwinkumar Gordhandas & Bros, claimed before the Income Tax Officer (ITO) that it was engaged in manufacturing and processing activities, making Section 104 of the Income Tax Act, 1961, inapplicable. The Commissioner of Income Tax (Appeals) upheld this claim. The Income Tax Appellate Tribunal (ITAT) confirmed the decision, holding that the assessee was entitled to relief under Section 104(4)(a). The revenue challenged this before the High Court of Gujarat through a reference under Section 256(1) of the Act for assessment years 1973-74 to 1975-76. The amount in dispute is not specified. The procedural history involves appeals up to the ITAT, followed by a reference to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee company was engaged in manufacturing and processing activities and therefore the provisions of section 104 were not applicable to the assessee? Assessee's Contention: The assessee argued that its activities constituted manufacturing and processing, thus exempting it from the provisions of Section 104. The assessee relied on the decisions of the CIT(A) and the ITAT. Revenue's Contention: The revenue contended that the assessee was not engaged in manufacturing and processing activities, and therefore Section 104 was applicable. The revenue's argument was implicitly that the Tribunal erred in its finding.

Which sections of the Income-tax Act were involved?

Section 104,Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 387 of 1983

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH ============================================================ 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? --------------------------------------------------------------

COMMISSIONER OF INCOME TAX Versus ASHWINKUMAR GORDHANDAS & BROS

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Appearance: MR B.B.Naik for Mr. MANISH R BHATT for Petitioner MR Manish Shah for Mr. JP SHAH for the Respondent

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CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 02/05/98

ORAL JUDGEMENT (Per R.K.Abichandani,J)

The Income-tax Appellate Tribunal, Ahmedabad has referred the following question for the opinion of this Court under section 256(1) of the Income-tax Act, 1961. "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee company was engaged in manufacturing and processing activities and therefore the provisions of section 104 were not applicable to the assessee ?"

2.

The matter pertains to the assessment years 1973-74 to 1975-76. The assessee claimed before ITO that it was a company engaged in manufacturing and processing activities and therefore, the provisions of section 104 of the Act were not applicable to it. In appeal, CIT (Appeals) allowed the assessee's claim holding that the said provision was not applicable to the facts of the assessee's case. The Tribunal confirmed the decision of the appellate Authority holding that the assessee was entitled to the relief under section 104(4) (a) of the Act.

3.

At the hearing, it is pointed out by the learned counsel for the revenue that the question stands covered by the decision of this Court in the assessee's to "processing". Applying the ratio of that decision in the assessee's case, we hold the Tribunal was right in its conclusion that the assessee company was engagged in processing activities and therefore, the provisions of section 104 were not applicable to the assessee. The question referred to us is therefore, answered in the affirmative against revenue and in favour of the assessee. The Reference stands disposed of accordingly with no order as to costs. ***** ***darji

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