PRINCIPAL COMMISSIONER INCOME TAX SURAT-1 vs. M/S. RAIVAT IMPEX

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TAXAP/322/2020HC GujaratGJHC24034766202028 January 2021Author: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MR. JUSTICE ILESH J. VORA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Appeal. It noted that the appeal did not merit consideration in light of its prior order in Tax Appeal No. 803 of 2019, decided on February 10, 2020. The Court observed that the ITAT had relied on this Court's decision in the case of Ruta Jewels (which was the subject matter of Tax Appeal No. 803 of 2019) as evident from paragraph 8 of the impugned order. Therefore, following its own precedent, the High Court found no reason to interfere with the ITAT's order. The appeal was dismissed in limine.

What were the facts?

The Revenue, Principal Commissioner of Income Tax, Surat-1, filed this Tax Appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Surat, dated December 13, 2019. The appeal pertains to Assessment Year 2014-15 and challenges the ITAT's decision to delete disallowances made by the Assessing Officer (AO). The core of the dispute involves the assessee, M/s. Raivat Impex, allegedly taking undue benefits of Section 10AA of the Act by not claiming interest on capital and remuneration, which consequently increased exempt profits. The ITAT had upheld the deletion of disallowances made by the AO.

What were the issues?

1. Whether, on the facts and in law, the ITAT was justified in deleting the disallowance made by the AO, considering the assessee allegedly took undue benefits of Section 10AA by not claiming interest on capital and remuneration, leading to an increase in exempt profit? (Question of law and fact, concerning Section 10AA). 2. Whether, on the facts and in law, the ITAT was justified in upholding the deletion of disallowances made by the AO by invoking Section 80-IA(10) read with Section 10AA(9) in allowing deductions of interest on capital and remuneration to partners, after finding that the assessee had taken undue benefits of Section 10AA by not claiming such interest, resulting in increased exempt profit? (Question of law and fact, concerning Sections 80-IA(10) and 10AA(9)). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The ITAT erred in deleting the disallowances made by the AO. The assessee gained an undue benefit from Section 10AA by not claiming interest on capital and remuneration, which inflated its exempt profits. The AO's disallowance was justified.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10AA,Section 80-IA(10)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/322/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 322 of 2020 ========================================================== PRINCIPAL COMMISSIONER INCOME TAX SURAT-1 Versus M/S. RAIVAT IMPEX ========================================================== Appearance: MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE ILESH J. VORA Date : 28/01/2021

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1.

This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short, 'the Act, 1961') is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Surat dated 13.12.2019 in ITA No. 56/SRT/2018 for A.Y. 2014-15. 2. The Revenue has proposed the following two substantial questions of law for consideration of this Court. (i) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in upholding the decision of the Hon'ble ITAT/CIT(A) in deleting the disallowance made by the AO without appreciating the fact that assessee had taken undue benefits of section 10AA of the I.T. Act by not claiming interest on Capital and Remuneration which resulted in increase in exempt profit of the assessee? C/TAXAP/322/2020 ORDER (ii)Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in upholding the order of the Ld. CIT(A)/ITAT in deleting the disallowance made by the Assessing Officer by invoking provisions of Section 80(IA)(10) r.w.s. 10AA(9) in giving deductions of interest on Capital and Remuneration to partners of the assessee firm after finding that the assessee had taken undue benefits of Section 10AA by not claiming Interest on Capital and Remuneration to partners which resulted in increase in exempted profit of the assessee?”

3.

We have heard Ms. Kalpana Raval, the learned Senior Standing Counsel appearing for the revenue.

4.

The Appeal does not merit consideration in view of the order passed by this Court in Tax Appeal No. 803 of 2019 decided on 10.02.2020. In fact we take notice of the fact that the Appellate Tribunal has referred to and relied upon the decision of this Court rendered in case of Ruta Jewels (Supra) i.e. the decision in Tax Appeal No. 803 of 2019, as evident from para-8 of the impugned order.

5.

In view of above, this Tax Appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (ILESH J. VORA,J) P.S. JOSHI

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