M/S.KRISHNA TEXTILE vs. COMMISSIONER OF INCOME-TAX

ITR/10/1997HC GujaratGJHC24020174199712 October 2006Bench: HONOURABLE MR. JUSTICE D.H.WAGHELA,HONOURABLE MR. JUSTICE R.S.GARG4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court of Gujarat, in relation to identical questions previously decided in ITR 106/96 between the same parties, held that the excise duty collected by the assessee on grey fabrics was indeed in the nature of trading receipts and was taxable under Section 43-B of the Income Tax Act, 1961. Furthermore, the court affirmed that a bank guarantee furnished by the assessee, secured by depositing the amount in a bank fixed deposit as margin money, did not constitute actual payment, thus making Section 43-B applicable. Consequently, both questions were answered against the assessee and in favour of the Revenue. The references were disposed of accordingly, with no costs awarded.

What were the facts?

This judgment concerns Income Tax Reference Nos. 9 and 10 of 1997, arising from appeals before the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'C'. The references were made at the instance of the assessee, M/s. Krishna Textiles, for Assessment Year 1988-89 (ITA No. 507/Ahd/1993) and Assessment Year 1987-88 (ITA No. 1837/Ahd/94). The core of the dispute revolves around the taxability of excise duty collected on grey fabrics and the applicability of Section 43-B of the Income Tax Act, 1961, concerning payments made against bank guarantees. The High Court of Gujarat is asked to provide its opinion on these matters.

What were the issues?

The Tribunal was asked to decide the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Excise Duty collected by the assessee on grey fabrics was in the nature of trading receipts and hence taxable u/s. 43-B of the Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the bank guarantee furnished by the assessee which was taken by the assessee by depositing the amount in bank fixed deposit as margin money did not tantamount to actual payment and so Section 43-B is applicable? The Assessee's contentions are not explicitly recorded in the provided text. The Revenue's contentions are also not explicitly recorded. The judgment states that identical questions were referred in ITR 106/96 and answered by the court.

Which sections of the Income-tax Act were involved?

Section 43-B

AI-generated summary — verify with the full judgment below

ITR/9/1997 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 9 of 1997 With INCOME TAX REFERENCE No. 10 of 1997 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE D.H.WAGHELA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= M/S.KRISHNA TEXTILES - Applicant(s) Versus COMMISSIONER OF INCOME TAX - Respondent(s) ========================================================= Appearance : MR MANISH J SHAH for Applicant(s) : 1, MR MANISH R BHATT for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE D.H.WAGHELA Date : 12/10/2006

ITR/9/1997 2/4 JUDGMENT ORAL JUDGMENT (Per : HONOURA

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 43-B

All 55 judgments and leading authorities on Section 43-B →

Recent GST High Court judgments

Search GST case law →