THE COMMISSIONER OF INCOME TAX, AURANGABAD. vs. AMBEJOGAI S.S.K. LTD. BEED
What did the High Court hold?
The High Court held that the question of law framed in the appeal was decided against the revenue and in favour of the assessee by a previous decision of the same Court in the case of Commissioner of Income Tax V/s. Samarth Sahakari Sakhar Karkhana Ltd. (Income Tax Appeal No. 273 of 2007), decided on September 17, 2007. Consequently, the Court answered the question in favour of the assessee and against the revenue. The appeal was disposed of accordingly, with no order as to costs. The specific reasoning from the cited precedent was not detailed in this judgment, but it formed the basis for the decision.
What were the facts?
The Commissioner of Income-tax (Appellant) filed an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT) dated December 16, 2005. The appeal pertains to the assessment year 1990-91. The dispute revolves around the disallowance of interest on advances paid by the assessee, Ambejogai Sahakari Sakhar Karkhana Ltd. (Respondent), to harvesting and transporting contractors. The ITAT had deleted this disallowance, holding the advances to be in the nature of business interest.
What were the issues?
1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that advances paid to harvesting and transporting contractors were in the nature of business interest of the assessee society, thereby deleting the disallowance of interest part, even though such advance was not made in the normal course of business and was made without any specific contractual obligation and out of borrowings on which the assessee is giving huge interest to financial institutions, thus constituting a diversion of borrowed funds for a non-business purpose? (Question of law) Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The advances were not made in the normal course of business, lacked specific contractual obligation, and were made out of borrowed funds, constituting a diversion for a non-business purpose, thus the interest disallowance was justified.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.324 OF 2007 INCOME TAX APPEAL NO.324 OF 2007 INCOME TAX APPEAL NO.324 OF 2007 The Commissioner of Income-tax Aayakar Bhavan, Near Holi Cross High School, Cantonment,Aurangabad. ..Appellant. V/s. Ambejogai Sahakari Sakhar Karkhana Ltd. Ambejogai, Dist. Beed. ..Respondent. Mr.B.M.Chatterjee with Mrs.P.P.Bhosale for appellant. Mr.S.N.Inamdar with A.K.Jasani for respondent. CORAM : F.I.REBELLO CORAM : F.I.REBELLO CORAM : F.I.REBELLO AND AND AND J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. DATED : 17TH SEPTEMBER, 2007. DATED : 17TH SEPTEMBER, 2007. DATED : 17TH SEPTEMBER, 2007.
ORAL JUDGMENT (PER J.P.DEVADHAR, J.) ORAL JUDGMENT (PER J.P.DEVADHAR, J.) ORAL JUDGMENT (PER J.P.DEVADHAR, J.) 1. This appeal is filed by Commissioner of Income Tax under section 260 A of the Income Tax Act, 1961 against the order of the ITAT dated 16/12/2005 relating to the assessment year 1990-91. 2. The appeal is admitted on the following question of law:- "Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that advances paid to harvesting and transporting contractors was in the nature of business interest of the assessee society and thereby deleting the disallowance of interest part, even though such advance was not made in the normal course of business and was made without any specific contractual obligation and out of borrowings on which CNR No : HCBM020046502007 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:40
-= : 2 : =- assessee is giving huge interest to financial institutions. Thus, it was nothing but a diversion of borrowed funds for non business purpose ? " 3. Counsel on both the sides agree that the aforesaid question of law is answered against the revenue and in favour of the assessee by the decision of this Court in the case of Commissioner of Income Tax V/s. Samarth Sahakari Sakhar Karkhana Ltd. in Income Tax Appeal No. 273 of 2007 decided on 17th September, 2007. Accordingly, the question is answered in favour of the assessee and against the revenue. 4. Appeal disposed of accordingly with no order as to costs. (F.I.REBELLO, J.) (F.I.REBELLO, J.) (F.I.REBELLO, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.)
Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:40 Powered by TCPDF (www.tcpdf.org)
Recent GST High Court judgments
Search GST case law →- M/S. Mishka Steels LLP And Anr. vs. The Superintendent Of Central Goods And Service Tax, Cx, Range-Ii, Behala Div. And Ors.Calcutta · 14 Oct 2026
- M/S Gujarat Co-Operative Milk Marketing Federation Limited vs. Union Of INDIAGujarat · 14 Oct 2026
- Ramesh K Devadiga vs. Khernagar Nandadeep Co Operative Housing Society LTDBombay · 14 Oct 2026
- Ramesh K Devadiga And Ors vs. Khernagar Nandadeep Co-Operative Housing Society LTD And OrsBombay · 14 Oct 2026
- Permender Singh vs. Union Of INDIA And Ors.Calcutta · 14 Oct 2026
