COMMISSIONER OF INCOME TAX vs. DEEPAL H. MEHTA

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TAXAP/962/2006HC GujaratGJHC24037939200606 August 2008Bench: HONOURABLE MR. JUSTICE K.A.PUJ,HONOURABLE MR. JUSTICE BANKIM.N.MEHTA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed all the Tax Appeals filed by the Revenue. The Court answered the substantial question of law in the affirmative, meaning in favor of the assessee and against the Revenue. This indicates that the High Court agreed with the ITAT's decision to dismiss the Revenue's appeal on the grounds of low tax effect, and found that the reliance on the internal CBDT circular was not a valid reason to overturn the ITAT's order. The reasoning is based on a detailed order previously passed by the High Court in similar matters, which was applied to the present appeals. The operative direction was to dismiss the appeals, disposing of them without any order as to costs.

What were the facts?

The Commissioner of Income Tax (Revenue) filed multiple Tax Appeals before the High Court of Gujarat against the orders of the Income Tax Appellate Tribunal (ITAT). The appeals challenged the ITAT's decision to dismiss the Revenue's appeals on the grounds of low tax effect. The Revenue contended that the ITAT's reliance on an internal CBDT circular, not issued under Section 119 of the Income-tax Act, 1961, was incorrect. The High Court had previously dealt with similar matters in other Tax Appeals and had passed a detailed order. The present appeals were heard together with those previous matters.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in dismissing the appeal on the ground of low tax effect relying upon an internal Circular issued by the CBDT which is meant for department use and cannot be equated to a circular issued under Section 119 of the I.T. Act? (Question of law) Assessee's contentions: The judgment does not record any specific contentions made by the assessee. However, the High Court's decision in favor of the assessee implies that the assessee likely argued that the ITAT's decision to dismiss the appeal on grounds of low tax effect, based on an internal circular, was justified or that the revenue's appeal lacked merit. Revenue's contentions: The Revenue argued that the Appellate Tribunal was wrong in dismissing its appeal on the ground of low tax effect. The Revenue contended that the ITAT relied on an internal CBDT circular, which is intended for departmental use and cannot be treated as a circular issued under Section 119 of the Income-tax Act, 1961, implying that such a circular should not be the basis for dismissing an appeal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 119

AI-generated summary — verify with the full judgment below

TAXAP/962/2006 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 962 TO 966 of 2006 WITH TAX APPEAL No. 1493 TO 1495 of 2006 WITH TAX APPEAL No. 1880 of 2006 TAX APPEAL No. 406 of 2007 TAX APPEAL No. 496 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 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 ? NO 5. Whether it is to be circulated to the civil judge ? NO

TAXAP/962/2006 2/3 JUDGMENT ==================================== COMMISSIONER OF INCOME TAX - Appellant(s) Versus DEEPAL H. MEHTA - Opponent(s) ==================================== Appearance : MR MANISH R BHATT for Appellant. MR SN SOPARKAR, SENIOR ADVOCATE WITH MRS SWATI SOPARKAR for Opponent. ==================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ and HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Date : 06/08/2008 COMMON ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. The revenue has filed these Tax Appeals under Section 260A of the Income-tax Act, 1961 proposing to formulate the following substantial question of law for the consideration and determination of this Court :- Whether the Appellate Tribunal is right in law and on facts in dismissing the appeal on the ground of low tax effect relying upon the internal Circular issued by the CBDT which is meant for department use and cannot be equated to circular issued under Section 119 of the I.T. Act ? 2. All these tax appeals were admitted by this Court on different dates and more or less, substantial question of law is framed in similar manner. All these Tax Appeals were heard together by this Court. Similar

TAXAP/962/2006 3/3 JUDGMENT question was involved in Tax Appeals No.1402 to 1405 of 2007 and other cognate matters and a detailed order is passed by us in the said Tax Appeals. We have decided the said Tax Appeals in favour of the assessee and against the revenue and the question paused therein was answered in affirmative i.e. in favour of the assessee and against the revenue. 3. For the reasons stated and conclusions drawn therein and subject to the directions issued therein, we dismiss all these Tax Appeals filed by the revenue and question paused in all these Tax Appeals is answered in affirmative i.e. in favour of the assessee and against the revenue. 4. All these Tax Appeals are accordingly disposed of without any order as to costs. Sd/- [K. A. PUJ, J.] Sd/- [BANKIM N. MEHTA, J.] Savariya

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