COMMISSIONER OF INCOME TAX vs. ACCURATE ENGG. CO. LTD.

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ITR/206/1994HC GujaratGJHC24020282199429 April 2005Bench: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
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What did the High Court hold?

The High Court decided the two questions referred by the Income Tax Appellate Tribunal. Regarding the first question, the revenue stated it did not press the issue in light of a previous High Court decision concerning goodwill, tradename, trademark, and accretion in the value of assets of a proprietary business contributed as capital. Consequently, the first question was left unanswered as it was not pressed. For the second question, the revenue fairly conceded that the issue was concluded against it by the Supreme Court decision in Allied Motors (P) Ltd. v. Commissioner of Income Tax. Therefore, the High Court answered the second question in the affirmative, in favour of the assessee and against the revenue, applying the ratio of the Supreme Court's decision. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

This case involves an Income Tax Reference filed by the revenue (Commissioner of Income Tax) against the assessee (Accurate Engg. Co. Ltd.) before the High Court of Gujarat. The reference pertains to two questions framed by the Income Tax Appellate Tribunal. The first question concerned the deletion of an addition of Rs. 29,34,739/- made on account of short-term capital gain. The second question related to the applicability of Section 43B of the Income Tax Act, 1961, concerning unpaid sales tax liability. The revenue, through its counsel, did not press the first question, citing a previous decision of the High Court. For the second question, the revenue conceded that the issue was concluded against it by a Supreme Court decision.

What were the issues?

The Tribunal was asked to decide two questions of law at the instance of the revenue: 1. Whether the Appellate Tribunal was right in law and on facts in deleting the addition made of Rs. 29,34,739/- on account of short-term capital gain under Section 45 of the Income Tax Act, 1961? 2. Whether the Appellate Tribunal was right in law and on facts in holding that if the unpaid sales tax liability to the last quarter is paid within the time stipulated for filing of return under Section 139(1), the provisions of Section 43B cannot be made applicable? Contentions: Assessee: Not recorded. Revenue: For question 1, the revenue did not press the issue, relying on a High Court decision. For question 2, the revenue conceded that the issue was concluded against it by the Supreme Court decision in Allied Motors (P) Ltd. v. Commissioner of Income Tax.

Which sections of the Income-tax Act were involved?

Section 45,Section 139(1),Section 43B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 206 of 1994

For Approval and Signature:

HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO 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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus ACCURATE ENGG. CO. LTD. -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 206 of 1994 MR TANVISH U. BHATT for Applicant MR SN SOPARKAR, SR.ADVOCATE WITH MRS.SWAMY SOPARKAR for Respondent

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

CORAM : HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI

Date of decision: 29/04/2005

ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE D.A.MEHTA) 1. The following two questions have been referred by the Income Tax Appellate Tribunal under Section 256(1) of the Income Tax Act, 1961 at the instance of revenue.

"(1) Whether, the Appellate Tribunal is right in law and on facts in deleting the addition made of Rs.29,34,739/- on account of short term capital gain under Section 45 of the Act?

(2) Whether, the Appellate Tribunal is right in law and on facts in holding that if the unpaid sales tax liability to the last quarter is paid within the time stipulated for filing of return under section 139(1) the provisions of Section 438 cannot be made applicable?"

2.

Mr.Tanvish U.Bhatt, the learned standing counsel appearing on behalf of applicant - revenue stated that he does not press question No.1 in light of the decision rendered today by this Court in Income Tax Reference No.69 of 1993, wherein it is specifically held that goodwill, tradename or trademark as well as the right to accretion in the value of the assets of the proprietary business contributed as capital on 1st April 1984 are separate and independent assets retained by Accurate Trust and do not form part of the properties of the respondent assessee firm. Accordingly, question No.1 is left unanswered as the same is not pressed.

3.

In relation to question No.2, Mr. Tanvish U.Bhatt very fairly invited attention to the decision of the Supreme Court in case of Allied Motors (P) Ltd. v. Commissioner of Income Tax, (1997) 224 ITR 677, to submit that the issue raised by second question stands concluded against the revenue.

4.

Accordingly, question No.2 is answered in the affirmative i.e. in favour of the assessee and against the revenue applying the ratio of the aforesaid decision in case of Allied Motors (P) Ltd. (supra).

5.

The Reference stands disposed of accordingly. There shall be no order as to costs.

[D.A.MEHTA, J.]

[H.N.DEVANI, J.]

parmar*

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