THE COMMISSIONER OF INCOME TAXGANDHINAGAR vs. GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD.

O/TAXAP/1155/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1155 of 2007 With TAX APPEAL NO. 1156 of 2007

FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 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 ? ================================================================ THE COMMISSIONER OF INCOME TAXGANDHINAGAR....Appellant(s) Versus GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD.....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 MR BS SOPARKAR for MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 23/12/2014 COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) Page 1 of 4

O/TAXAP/1155/2007 JUDGMENT 1. Since, the issue involved in both the appeals is common, they are heard together and disposed of by this common judgment. 2. These are the appeals by the appellant- Revenue, challenging the order of the learned ITAT, Ahmedabad Bench ‘A’ (‘the Tribunal’, for short), Dated : 05.01.2007, rendered in ITA Nos. 4312 & 4311/Ahd/2003 for the A.Y. 1996-97, whereby, the Tribunal allowed the appeal filed by the assessee, whereas, dismissed the appeal filed by the Revenue. 3. The brief facts of the case are that the assessee-respondent, herein, filed its return of income for the year under consideration on 28.11.96, declaring its total income at Rs.1,71,79,320/- along with audited balance sheet, P & L Account, report of the auditor etc.. Then, the case of the assessee came to be selected for scrutiny and it was issued notices under Section 143(2) and 142(1) of the Income Tax Act, 1961 (for short, ‘the Act’). The concerned AO, thereafter, made certain additions / disallowances to the income of the assessee. Therefore, the assessee approached the learned CIT(A) by filing an appeal, which came to be allowed in part. Being aggrieved with the same, the Revenue carried the matter before the Page 2 of 4

O/TAXAP/1155/2007 JUDGMENT Tribunal by filing an appeal and it appears that the assessee also filed an appeal. Then, after hearing the parties, the Tribunal passed the impugned order. Hence, the present appeals. 4. At the time of admission, this Court framed the following question, which is common in both the appeals, of law for consideration; “(A) Whether the Appellate Tribunal was right in law and on facts in allowing deduction u/S.36(1)(viia) of the I.T. Act, 1961, in the absence of creation of reserves and also in spite of business loss under the head ‘income from business and profession?” 5. At the very outset, Mr. Soparkar, learned Advocate for the assessee, invited our attention to a decision of this Court in Tax Appeal No. 1450 of 2005 in the case of “CIT, GANDHINAGAR, VS. GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD.”, wherein, this Court, while answering the question framed in that appeal in favour of the assessee, therein, observed and held as under; “3.1 Similarly, question no. 2 raised in this appeal is also squarely governed by the decision of this Court in the case of Commissioner of Income- Tax vs. Gujarat State Financial Corporation reported in [1994] 210 ITR 698 wherein this Court has held that Page 3 of 4

O/TAXAP/1155/2007 JUDGMENT the deduction under section 36(1)(viii) of the Income-tax Act, 1961 has to be worked out by applying the proper percentage of the total income computed before deductions under section 36(1) (viii) and Chapter VI-A.” 6. Mr. Mehta, learned Advocate for the appellant-Revenue in both the appeals, does not dispute the aforesaid position of law. 7. Thus, in view of the fact that the question raised in these appeals has already been answered by us in favour of the assessee, present appeals deserve to be dismissed without assigning any further elaborate reasons. 8. In the result, both the appeals fail and stand DISMISSED. We held that the Appellate Tribunal was right in law and on facts in allowing deduction u/S.36(1)(viia) of the I.T. Act, 1961, in the absence of creation of reserves and also in spite of business loss under the head ‘income from business and profession. The question raised in these appeals is answered in FAVOUR of the assessee and AGAINST the Revenue, accordingly. (K.S.JHAVERI, J.) (K.J.THAKER, J) UMESH Page 4 of 4