COMMISSIONER OF INCOME TAX vs. GUJARAT MINERAL DEVELOPMENT CORPORATION LTD.

O/TAXAP/1531/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1531 of 2005

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 ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus GUJARAT MINERAL DEVELOPMENT CORPORATION LTD.....Opponent(s) ================================================================ Appearance: MR MANISH BHATT, SENIOR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR BS SOPARKAR, ADVOCATE FOR MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI Page 1 of 4

O/TAXAP/1531/2005 JUDGMENT and HONOURABLE MR.JUSTICE K.J.THAKER

Date : 21/11/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the appellant-Revenue has challenged the order dated 18.10.2004 passed by the Income- tax Appellate Tribunal, Ahmedabad Bench, in ITA No. 1209/Ahd/95 for assessment year 1991-92. 2. While admitting this appeal on 13.07.2006, this Court has framed the following substantial question of law: “Whether on the facts and circumstances of the case, the Appellate Tribunal was right in allowing the deduction u/s 80I of the Income Tax Act, 1961 on the extraction and selling of lignite?” 3. The facts of the present case are that during the course of assessment proceedings, the assessee had written off the amount which was advanced by it to Gujarat Maritime Board in 1984 as bad debts. The assessing officer disallowed the claim and held that only debts of revenue nature which became bad are allowable as deduction. The assessee appealed before Commissioner (Appeals), and CIT(A) upheld the same. On further appeal by the assessee, the Tribunal reversed the order holding that there is direct and prominent nexus between the business operation and such loss is a trading loss. Against the said order of the Tribunal, the Revenue has preferred the present Tax Appeal. Page 2 of 4

O/TAXAP/1531/2005 JUDGMENT 4. Heard the learned advocates appearing for the parties and considered the submissions. An identical issue also came up for consideration before this Court in Tax Appeal No. 360 of 2006 with Tax Appeal No. 361 of 2006, where this Court vide judgement and order dated 14.11.2014 has observed as under: 5. However, learned Senior Counsel for the respondent Mr. S.N. Soparkar has contended that the issue is covered by the decision of the Supreme Court in the case of Commissioner of Income-Tax v. Sesa Goa Ltd. reported in 271 Income Tax Reports 331 and which was subsequently followed in 287 Income Tax Reports 416. Relevant part of the above decision reads as under :- ”Learned counsel appearing on behalf of the assessee, correctly submitted that the other provisions of the Act, particularly section 33(1)(b) (B) read with Item No.3 of the Fifth Schedule to the Act, would show that mining of ore is treated as production Section 35E also speaks of production in the context of mining activity. The language of these sections is similar to the language of section 32A(2). There is no reason for us to assume that the word production was used in a different sense in section 32A. We are, therefore, of the opinion that extraction of processing of iron ore amounts to production within the meaning of the word in section 32A(2)(b)(iii) of the Act and, consequently, the assessee is entitled to the benefit of section Page 3 of 4

O/TAXAP/1531/2005 JUDGMENT 32A(1) of the Act. The question whether the High Court was correct in holding that the activity did not amount to manufacture is left open.” In view of the above, the question is answered in favour of the assessee and in negative against the Department as the facts are akin in the cases. Hence, both the appeals stand dismissed.” 5. In that view of the matter, no elaborate reasons are required more particularly when this Court has already taken a view in favour of the same assessee on the same question of law vide judgement and order dated 14.11.2014 passed in Tax Appeal No. 360 & 361 of 2006. Therefore, we answer the question in favour of the assessee and against the Revenue. The present Tax Appeal is dismissed accordingly. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 4 of 4