COMMISSIONER OF INCOME TAX I vs. GARDEN SILK MILLS LTD.
What did the High Court hold?
The High Court dismissed the Tax Appeal filed by the Revenue. The Court noted that the ITAT, in its impugned order for Assessment Year 2005-06, had relied on its own previous decision concerning Assessment Year 2003-04, where a similar addition made by the AO was set aside. The Court found that since the ITAT's decision for the earlier year had attained finality, and the facts and grounds were similar for the current assessment year, the ITAT's deletion of the addition of Rs. 88,00,000/- in respect of commission payments to directors was justified. The Court concluded that no question of law, much less a substantial question of law, arose from the ITAT's order, and therefore, the appeal deserved to be dismissed.
What were the facts?
The Revenue (Commissioner of Income Tax I) is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) dated February 15, 2013, concerning Assessment Year 2005-06. The ITAT had deleted an addition of Rs. 88,00,000 made by the Assessing Officer (AO) on account of commission payments to directors. The AO had disallowed the commission on the grounds that the assessee (Garden Silk Mills Ltd.) failed to prove the payments were exclusively for business purposes. The Revenue has filed a Tax Appeal before the High Court of Gujarat challenging the ITAT's decision.
What were the issues?
1. Whether, on the facts and circumstances of the case and as per law, the ITAT is right in deleting the addition made by the AO in respect of commission payment to the Directors of Rs. 88,00,000/-, as the assessee failed to prove that the payments were made exclusively for the business? (Question of law) The Revenue's contention is that the ITAT erred in deleting the addition because the assessee did not sufficiently prove that the commission payments to directors were exclusively for business purposes. The Revenue relies on the AO's finding. The Assessee's contention is not explicitly recorded in the judgment, but it is implied that they argued the ITAT's decision was correct. The judgment notes that a similar addition for Assessment Year 2003-04 was set aside by the ITAT and had attained finality.
AI-generated summary — verify with the full judgment below
O/TAXAP/876/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 876 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA
====================================== 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 I....Appellant(s) Versus GARDEN SILK MILLS LTD.....Opponent(s) ====================================== Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 MR MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 10/12/2013
ORAL JUDGMENT Page 1 of 3
O/TAXAP/876/2013 JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal (hereinafter referred to as ‘ITAT’) dated 15/02/2013 in ITA No. 651/Ahd/2009 for the Assessment Year 2005-06, the revenue has preferred the present Tax Appeal with the following proposed question of law; “Whether on the facts and circumstances of the case and as per law, ITAT is right in deleting the addition made by the A.O. in respect of commission payment to the Directors of Rs.88,00,000/- as the assessee failed to prove that the payment were made exclusively for the business?” 2. Heard Shri Sudhir Mehta, learned Counsel appearing on behalf of the appellant and Shri J.P. Shah, learned Counsel appearing on behalf of the opponent-assessee and perused the impugned judgment and order passed by the ITAT. It is not in dispute that in the previous year i.e. Assessment Year 2003-04 similar addition was made by the Assessing Officer, which has been set aside by the ITAT and the order passed by the ITAT deleting the addition made by the Assessing Officer on the similar ground has attained finality. While passing the impugned judgment and order, ITAT has relied upon its own decision with respect to the earlier Assessment Year 2003-04. Under the circumstances, with respect to the Assessment Year 2005-06 also when ITAT has deleted the addition made by the Assessing Officer in respect of commission of payment to the Directors of Rs.88,00,000/-, it cannot be said that ITAT has committed any error and/or illegality, which calls for the Page 2 of 3
O/TAXAP/876/2013 JUDGMENT interference of this Court. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R.SHAH, J.) (R.P.DHOLARIA,J.) Siji Page 3 of 3
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