THE JT. C.I.T. vs. KEVIN ENTERPRISE

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TAXAP/385/2000HC GujaratGJHC24022905200024 November 2014Bench: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue involved in the appeal was squarely covered by the decision of the Supreme Court in Rotork Controls India P. Ltd. v. Commissioner of Income Tax, [2009] 314 ITR 62(SC). Since the Revenue's counsel could not dispute this, the Court answered the substantial question of law in favour of the assessee and against the Revenue. The ITAT's deletion of the addition of Rs. 98,24,911/- on account of provision for warranty was upheld. The ratio decidendi is that if a matter is covered by a Supreme Court judgment, the High Court will follow it, and the Revenue cannot dispute it. The operative direction was to dismiss the Tax Appeal.

What were the facts?

The assessee, Kevin Enterprise, filed its return of income for Assessment Year 1996-97 declaring a taxable income of Rs. 43,95,800/-. The return was initially processed under Section 143(1)(a) of the Income Tax Act, 1961. Subsequently, the case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued. The assessee provided the requested details and documents. An assessment order was passed. The assessee appealed to the CIT(A), which was partly allowed. The assessee then appealed to the ITAT, which was also partly allowed. The Revenue, aggrieved by the ITAT's order dated April 12, 2000, filed the present Tax Appeal before the High Court.

What were the issues?

1. Whether the ITAT was justified in law and on facts in deleting the addition of Rs. 98,24,911/- made on account of provision for warranty, which is in the nature of a contingent liability? (Question of law and fact, concerning the treatment of warranty provisions). Assessee's contention: The issue is covered by the Supreme Court decision in Rotork Controls India P. Ltd. v. Commissioner of Income Tax, [2009] 314 ITR 62(SC). Revenue's contention: The learned advocate for the appellant (Revenue) was not in a position to dispute the assessee's contention.

Which sections of the Income-tax Act were involved?

Section 143(1)(a),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

O/TAXAP/385/2000 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 385 of 2000

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 JT. C.I.T.....Appellant(s) Versus KEVIN ENTERPRISE....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 MR SN SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 3

O/TAXAP/385/2000 JUDGMENT

Date : 24/11/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, the appellant has challenged the judgment and order dated 12.4.2000 passed by the Income Tax Appellate Tribunal in ITA No. 1234/Ahd/1999 for AY 1996-97. 2. While admitting this appeal on 15.11.2000, this Court has framed the following substantial question of law: “Whether the ITAT was justified in law and on facts in deleting the addition of Rs. 98,24,911/- made on account of provision of warranty which is in the nature of contingent liability ?” 3. The facts of the present case are that the return of income declaring not taxable income of Rs. 43,95,800/- was filed by the assessee as on 31.10.1996. The same was processed under sec. 143(1)(a) of the IT Act. Thereafter, the case was selected for sample scrutiny by issuing notice under sec. 143(2) of the Act, which was duly served upon the assessee and detailed questionnaire calling for various details along with notice under sec. 142(1) was issued to the assessee. In response to the same, the assessee filed various details and documents as called Page 2 of 3

O/TAXAP/385/2000 JUDGMENT for. After considering the material on record, the assessment order came to be passed. Against the said assessment order, an appeal before the CIT(A) has been preferred by the assessee, which was partly allowed. Against the said order of CIT(A), an appeal before the ITAT has been preferred by the assessee which was also partly allowed. Being aggrieved and dissatisfied with the order passed by the ITAT, the Revenue has preferred present Tax Appeal before this Court. 4. Heard the learned advocates appearing for the parties and considered the submissions. Learned advocate appearing for the respondent has contended that the issue involved in the present appeal is squarely covered by the decision of the Supreme Court in the case Rotork Controls India P. Ltd. v. Commissioner of Income Tax, reported in [2009] 314 ITR 62(SC). The learned advocate appearing for the appellant is not in a position to dispute the same. Therefore, in view of the decision of the Hon’ble Supreme Court, no elaborate reasons are given and the question is answered in favour of the assessee and against the Revenue. The present Tax Appeal is dismissed. (K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 3 of 3

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