COMMISSIONER OF INCOME-TAX vs. BHARAT VIJAY MILLS LTD

ITR/207/1984HC GujaratGJHC24011881198401 August 1996Author: HONOURABLE MR. JUSTICE B.C.PATEL,HONOURABLE MR. JUSTICE R.R.JAIN2 pages
AI SummaryPartly Allowed

What were the facts?

This case involves an Income Tax Reference before the High Court of Gujarat at Ahmedabad. The Commissioner of Income-tax (Petitioner) has referred two questions of law for the opinion of the Court, arising from an order of the Income Tax Appellate Tribunal. The assessee is Bharat Vijay Mills Ltd. The dispute pertains to assessment years not explicitly stated. The first question concerns whether deferred annuity premiums and personal accident insurance premiums paid for two Managing Directors, totaling Rs. 24,000 each for annuity and Rs. 926 each for insurance, were in the nature of perquisites and includible within the limits of Section 40A(2). The second question relates to the deletion of an addition of Rs. 11,036 made by the Income Tax Officer on account of guest house expenses under Section 37(4).

What did the High Court hold?

The High Court addressed each question separately. For the first question, concerning deferred annuity premiums and personal accident insurance for Managing Directors, the Court found it was covered by its prior decision in Gujarat Steel Tubes Ltd. vs. Commissioner of Income-tax (210 ITR 358). In that case, the Court held that amounts expended for purchasing deferred annuity policies constituted revenue expenditure for which deduction could not be granted under Section 37. Consequently, the High Court answered question No. 1 in favour of the revenue and against the assessee. For the second question, regarding the deletion of guest house expenses, the Court held that this issue was covered by its decisions in CIT vs. Ahmedabad Mfg. & Calico Printing Co. (197 ITR 538) and CIT, Gujarat-I vs. Gujarat Industrial Development Corporation, Ahmedabad (ITR No. 70/83). Based on these precedents, the High Court answered question No. 2 in favour of the assessee and against the revenue. No order as to costs was made.

What were the issues?

The Tribunal has referred two questions for the opinion of the High Court: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in confirming the view taken by the CIT (Appeals) in holding that Rs. 24,000/- each paid to two Managing Directors as deferred annuity premium and Rs. 926/- each paid for personal accident insurance for them were not in the nature of perquisite and cannot be including in the limits laid down under section 40 A (2) of the Income-tax Act, 1961? 2. Whether, deletion of the addition made by the I.T.O. on account of guest house expenses of Rs. 11,036/- under section 37 (4) of the Income Tax Act, 1961 is justified in law on the facts and in the circumstances of the case? Assessee's Contentions: The judgment does not record specific contentions made by the assessee for either question. The Tribunal's decision, as confirmed by the CIT(Appeals) on the first issue, implies the assessee argued these payments were not perquisites or subject to Section 40A(2) limits. For the second issue, the deletion by the Tribunal suggests the assessee argued against the addition of guest house expenses under Section 37(4). Revenue's Contentions: The judgment does not record specific contentions made by the revenue for either question. The reference itself indicates the revenue's disagreement with the Tribunal's findings.

Which sections of the Income-tax Act were involved?

Section 40A(2),Section 37(4),Section 37

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 207 of 1984

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and MR.JUSTICE R.R.JAIN ============================================================ 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?

-----

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 40A(2)

All 542 judgments and leading authorities on Section 40A(2) →

Recent GST High Court judgments

Search GST case law →