COMMISSIONER OF INCOME-TAX vs. CAMA HOTELS LTD.

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ITA/28/1998HC GujaratGJHC24024066199825 March 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the question of law framed by the Revenue arises for consideration. Consequently, the Tribunal was directed to forward a statement of case in respect of this question. The High Court did not decide the merits of the disallowance itself but rather acknowledged the existence of a substantial question of law that warranted further examination by the High Court. The operative direction was to the Tribunal to prepare and forward the statement of case. No specific finding on the deductibility of the expenditure was made by the High Court at this stage.

What were the facts?

The Commissioner of Income-tax (Revenue) sought a direction from the High Court of Gujarat under Section 256(2) of the Income-tax Act, 1961, to the Income-tax Appellate Tribunal (ITAT) to forward a statement of case. The dispute concerned the assessment year(s) not explicitly stated. The Revenue challenged the ITAT's decision to delete a disallowance of Rs. 38,62,972/-. This disallowance pertained to expenditure incurred by Cama Hotels Ltd. (assessee) for renovating hotel rooms and conference halls. The High Court considered the matter and issued a rule, which was subsequently made absolute.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in deleting the disallowance of Rs. 38,62,972/- being expenditure incurred to renovate the hotel rooms, conference hall etc.? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the fact that the ITAT deleted the disallowance implies the assessee likely argued that the expenditure was revenue in nature and deductible. Revenue's Contention: The Revenue contended that the ITAT erred in deleting the disallowance of Rs. 38,62,972/-. The Revenue likely argued that the expenditure was capital in nature, or that the ITAT's decision was not in accordance with law and facts.

Which sections of the Income-tax Act were involved?

Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX APPLICATION No 28 of 1998

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 CAMA HOTELS LTD. -------------------------------------------------------------- Appearance: MR B B Naik for Mr. MANISH R BHATT for Petitioner MR JP SHAH for the Respondent

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

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 25/03/98

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

Rule. Learned counsel Mr. J.P.Shah for the respondent waives service of Rule. The Revenue has suggested the following question seeking a direction on the Income-tax Appellate Tribunal to forward statement of case in respect thereof under section 256(2) of the Income-tax Act, 1961. "1.Whether, the Appellate Tribunal is right in law and on facts in deleting the disallowance of Rs. 38,62,972/- being expenditure incurred to renovate the hotels room, conference hall etc.?"

2.

On going through the record, it appears that this question of law arises for consideration of this Court. We therefore, direct the Tribunal to forward statement of case in respect of this question. Rule is made absolute accordingly with no order as to costs.

... ***darji

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