DR. JOSE JULIO D'COSTA., vs. COMMISSIONER OF INCOME TAX, BANGALORE.,

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RUIT/24/2016HC BombayHCBM05002862201617 January 2018Author: HON'BLE SHRI JUSTICE SHANTANU S. KEMKAR,HON'BLE KUM. JUSTICE NUTAN D. SARDESSAI3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, after considering the submissions of both parties, was of the view that the matter required to be remanded back to the Tribunal for a fresh decision. The Court noted the arguments regarding the amendments to Section 5A and Section 32 of the Income Tax Act and their applicability to the assessment year 1984-85. The Court found that the Tribunal had not adequately considered the law prevailing at the relevant time. Therefore, instead of answering the referred questions, the High Court decided to dispose of the reference by remanding the case to the Tribunal. The Tribunal is now directed to decide the issues afresh, taking into account the law as it stood during the assessment year in question. No specific finding was given on the questions of law, and the issue of depreciation on communion property for the relevant year remains undecided by the High Court.

What were the facts?

This case involves a reference under Section 256(1) of the Income Tax Act, 1961, made by the Income Tax Appellate Tribunal, Pune, to the High Court of Bombay at Goa. The assessee is Dr. Jose Julio D'Costa, and the respondent is the Commissioner of Income Tax, Bangalore. The assessment year in question is 1984-85. The core issue revolves around the deductibility of depreciation under Section 32 on communion property used for carrying on a profession, considering the provisions of Section 5A of the Act as they existed during the relevant assessment year. The assessee contended that the authorities had not decided the issue based on the law prevailing at the time, particularly concerning the amendments to Sections 5A and 32 of the Act.

What were the issues?

The Tribunal was asked to decide the following questions: 1. Whether, in computing income from a profession carried on by a member of the Communion of property in Goa, deduction under Section 32 for depreciation on communion property used for the profession is not allowable, considering Head D (Profits and gains of business or profession) comprising Sections 28 to 44D read with Section 5A of the Act. 2. Whether a member of the Communion Property in Goa is a fractional owner of the communion property and thus not entitled to depreciation under Section 32 on communion property used in the course of carrying on the profession. Assessee's Contentions: The assessee argued that the Assessment Officer, Commissioner, and Tribunal had failed to decide the matter based on Section 5A read with Section 32 of the Act as it prevailed during AY 1984-85. He highlighted that Section 5A was amended retrospectively from 01/04/1963, and Section 32, introducing "owned only or partly by the Assessee," was amended prospectively from 01/04/1999. Therefore, the referred questions might not arise, and the Tribunal should reconsider the case based on the law at the relevant assessment time. Revenue's Contentions: The revenue's counsel conceded that while Section 5A's retrospective amendment might not alter the Tribunal's interpretation, she could not dispute that Section 32 was amended prospectively from 01/04/1999 and might not apply to the relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 5A,Section 32,Section 28,Section 44D

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF BOMBAY AT GOA REFERENCE UNDER INCOME TAX ACT NO. 24 OF 2016 DR. JOSE JULIO D'COSTA., ... Applicant Versus COMMISSIONER OF INCOME TAX, BANGALORE., ... Respondent Mr. R.G. Rivankar a/w. Mr. Rama Rivankar, Advocate for the Applicant. Ms. Amira Razaq, Advocate for the Respondent. Coram:- SHANTANU S. KEMKAR & NUTAN D. SARDESSAI, JJ. Date:- 17th January 2018 PC. . Parties through their counsel.

2.

This Reference under Section 256(1) of the Income Tax Act, 1961 (for short "the Act") has been made by the Income Tax Appellate Tribunal, Pune for answering the following questions. "(1) Whether in computing the income from profession carried on by a member of the Communion of property in force in the State of Goa, in accordance to the provisions of Head D - Profits and gains of business of Profession' comprising of sections 28 to 44D, read with sec. 5A of the Ace deduction under section 32 on account of depreciation cannot be allowed on communion property used for the purpose of carrying on profession.

2 RUIT/24/2016 (2) Whether the member of the Communion Property in force in the State of Goa is a fractional owner of the Communion Property and hence is not entitled to depreciation under section 32 of the Communion Property used by him in the course of carrying on Profession ?"

3.

The learned counsel for the Applicant submits that all the authorities i.e. Assessment Officer, the Commissioner and the Tribunal have not decided the issue involved in the matter on the basis of Section 5A read with Section 32 of the Income Tax Act as was prevailing during the relevant A.Y. 1984-85. It has been pointed out by him that Section 5A of the Act was amended in the year 1994 with retrospective effect giving effect to it from 01/04/1963 and Section 32 of the Act introducing the expression "owned only or partly by the Assessee" was amended with effect from 01/04/1999. In the circumstances, according to him the questions which have been referred for being answered by this Court will not arise and the Tribunal is required to consider the Assessee's case afresh taking into consideration the law at the relevant time of assessment.

4.

The learned counsel appearing for the Revenue submits that Section 5A of the Act since being amended retrospectively, there would not be any change in the interpretation given by the Tribunal to that extent. However, she is not in a position to 3 RUIT/24/2016 dispute that Section 32 of the Act has been amended prospectively from 01/04/1999 and hence may not apply to the assessment of the relevant year in question.

5.

Having considered the submissions made by the learned counsel for the parties, we are of the view that the matter requires to be remanded back to the Tribunal to decide it afresh taking into consideration the law prevailing at the relevant time. In these circumstances, we decline to answer the questions referred.

6.

The Reference is disposed of accordingly. NUTAN D. SARDESSAI, J. SHANTANU S. KEMKAR, J. vishal

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