COMMISSIONER OF INCOME TAX vs. CHALTHAN VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD

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ITR/298/1984HC GujaratGJHC24011963198420 December 1999Bench: HONOURABLE MR. JUSTICE B.C.PATEL,HONOURABLE MR. JUSTICE K.M.MEHTA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered the reference in favour of the revenue and against the assessee. The Court noted that a Division Bench of the same High Court, in a similar reference (Income Tax Reference No. 124/84), had answered the question in favour of the revenue. That decision had relied on the principle laid down by the Supreme Court in CIT vs. Kotagiri Industrial Cooperative Tea Factory Ltd. The Supreme Court's principle, as applied by the Division Bench, indicated that before considering deductions under Section 80P, the Assessing Officer had rightly set off credit losses of earlier years in accordance with Section 42 of the Act. Finding that these losses exceeded the income, the ITO did not allow the deduction under Section 80P. Therefore, the High Court concluded that the Tribunal was not justified in holding that the assessee was entitled to the deductions under Section 80P(2)(a)(i) and Section 80P(2)(d). No order as to costs was made.

What were the facts?

The assessee, Chalthan Vibhag Khand Udyog Sahakari Mandali Ltd., claimed deductions under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Income Tax Act, 1961, for Rs. 4,04,400 and Rs. 1417 respectively, relating to interest received from members and dividends/interest from cooperative societies. The Assessing Officer rejected this claim on August 28, 1981. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's order on February 25, 1983. The Income Tax Appellate Tribunal, Surat, allowed the assessee's appeal on January 19, 1984, relying on an assessment order for Assessment Year 1974-75. Subsequently, the revenue filed an Income Tax Reference No. 124/84 before the Gujarat High Court, which was decided on July 20, 1998, in favour of the revenue and against the assessee, referencing a Supreme Court judgment.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to deduction under section 80P(2)(a)(i) and under section 80P(2)(d) of the Income Tax Act, 1961? Assessee's Contention: The assessee claimed deductions under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Act. The Tribunal allowed the appeal, holding the assessee entitled to these deductions. Revenue's Contention: The revenue contended that the assessee was not entitled to the claimed deductions. The Assessing Officer and the CIT(A) had rejected the claim. The revenue further relied on a Division Bench decision of the Gujarat High Court in Income Tax Reference No. 124/84, which was decided in its favour, and the principle laid down by the Supreme Court in CIT vs. Kotagiri Industrial Cooperative Tea Factory Ltd. (224 ITR 604).

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 42

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 298 of 1984

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and

MR.JUSTICE K.M.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : YES 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 Civil Judge? : NO

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus CHALTHAN VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner MR JP SHAH for Respondent No. 1

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

CORAM : MR.JUSTICE B.C.PATEL and MR.JUSTICE K.M.MEHTA Date of decision: 20/12/1999

ORAL JUDGEMENT

(PER PATEL,J):

1.

The Income Tax Appellate Tribunal, Surat has referred the following question for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to deduction under section 80P(2)(a)(i) and under section 80P(2)(d) if the Income Tax Act, 1961?"

2.

The assessee claimed certain benefits such as deduction of Rs.4,04,400/- under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") and Rs.1417/- under Section 80P(2)(d) of the Act in respect of interest received from members of cooperative societies and dividend and interest received from the cooperative societies. The Income Tax Officer by his order, dated 28.8.1981 rejected the claim of the Assessee. Being aggrieved by the order passed by the Income Tax Officer the assessee preferred appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) by his order dated 25.2.1983 confirmed the assessment order passed by the Assessing Officer for the reasons recorded in the order i.e. to say that the views taken in the earlier orders have been confirmed. The assessee approached the Tribunal and the Tribunal by its order, dated 19.1.1984 allowed the appeal. The Tribunal has placed reliance on the assessment order for the Assessment Year 1974-75. The revenue carried the matter further and the Division Bench of this Court in Income Tax Reference No.124/84 decided on 20.7.1998 answered the reference in favour of revenue and against the assessee. There the claim was made for deduction of Rs.2,89,855/- under section 8-P(2)(d)(i) and Rs.233/under section 80P (2)(d) of the Act. Considering the judgment of the Apex Court reported in the matter of CIT vs Kotagiri Industrial Cooperative Tea Factory Ltd reported in 224 ITR 604 it seems the court answered the question in favour of revenue and against the assessee. The question framed by the Division Bench reads as under:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to deduction as cotemplated under section 80P & 80G of the Income Tax Act, 1961?"

The Division Bench hearing the said reference pointed out in para 4 as under:

"4.Almost in similar circumstances, the Supreme Court held that before considering the matter of deduction under section 80B(5) the Income Tax Officer rightly set-off the credit loss of earlier years in accordance with Section 42 of the Act and finding that the same exceeded, the ITO did not allow the deduction under section 80P of the Act. The principle laid down by the Supreme Court in Kotagiri Industrial Coop.Tea Factory Ltd will apply to the facts of the present case also.".

3.

Having gone through the judgment of the Apex Court and the decision of this court, we answer the reference in favour of revenue and against the assessee. No order as to costs.

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