THE COMMISSIONER OF INCOME TAX AURANGABAD vs. M/S RUCHA ENGINEERS PVT LTD AURANGABAD

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ITA/79/2013HC BombayHCBM03026419201306 January 2015Bench: HON'BLE SHRI JUSTICE A.V. NIRGUDE,HON'BLE SHRI JUSTICE V.K. JADHAV3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that in view of the settled law, there appeared to be no substantial question of law arising in these appeals. The court found no difficulty in accepting the findings recorded by the lower authorities, which had held that the amount credited to Capital Reserve was not revenue received. The reasoning is based on previous judgments of the High Court in similar matters and a judgment from the Karnataka High Court. The appeals were disposed of in accordance with this finding, effectively upholding the decisions of the CIT(A) and ITAT. No specific issue was left undecided.

What were the facts?

These appeals by the Commissioner of Income Tax, Aurangabad, challenge the concurrent findings of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The lower authorities held that the Assessing Officer erred in bringing to tax an amount under Section 41(1) of the Income Tax Act. The dispute pertains to the difference between the principal value of a sales-tax deferral loan and the net present value credited to Capital Reserve. Both appellate authorities concluded that this credited amount was not revenue received. The High Court noted that similar matters had been decided by this court in other appeals and by the Karnataka High Court in the case of Commissioner of Income Tax vs. M/s. McDowell & Co Ltd.

What were the issues?

1. Whether the credit to Capital Reserve, representing the difference between the principal value of a sales-tax deferral loan and its net present value, constitutes a revenue receipt taxable under Section 41(1) of the Income Tax Act, 1961. Assessee's Contentions: The assessee argued that the amount credited to Capital Reserve was not revenue received and therefore not taxable. The lower appellate authorities, the CIT(A) and the ITAT, had considered the case cogently and held in favour of the assessee. Revenue's Contentions: The Revenue contended that the Assessing Officer was correct in bringing the amount to tax under Section 41(1). The Revenue's argument is implicitly challenged by the concurrent findings of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 41(1)

AI-generated summary — verify with the full judgment below

TA79.13 -1-

IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD INCOME TAX APPEAL NO. 79 OF 2013 WITH INCOME TAX APPEAL NO. 48 OF 2011 The Commissioner of Income Tax, Aurangabad ...Appellant versus M/s. Rucha Engineers Pvt. Ltd. ...Respondent ….. Mr. Alok Sharma, Advocate for the appellant Mr. S.V. Advant, Advocate for the respondent .....

CORAM : A. V. NIRGUDE AND

V. K. JADHAV, JJ.

DATED : 7th JANUARY, 2015 P.C. :- 1. Both these appeals are disposed of by this common order, as the facts in these appeals are almost similar. Both these appeals are filed by the Income Tax Department challenging the concurrent findings recorded by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, holding that the Assessing Officer had erred in bringing the tax under Section 41 (1) of the Income Tax Act. The difference between the principal value of sales-tax deferral loan and net present value credited to Capital Reserve. Both these authorities have considered the case quite cogently and held that the

TA79.13 -2- amount so credited to capital reserve was not the revenue received. 2. This Court in Income Tax Appeal Nos. 450 of 2013, 453 of 2013 and other connected Appeals, comprehensively, held that such credit should not be considered as revenue receipt. 3. We have perused the judgment referred to above and found that the Division Bench of this Court has considered the question comprehensively taking into account the entire gamut relating to law and the arguments advanced by the appellant. There is one more judgment delivered by the Division Bench of Karnataka High Court in the case of Commissioner of Income Tax and another vs. M/s. McDOWELL & CO LTD, in Income Tax Appeal No. 899 of 2008, dated 2.9.2014. 4. We have no difficulty in accepting the findings recorded by the lower authorities. We hold that, in view of the settled law, there appears no substantial question of law arise in these appeals. The appeals stand disposed of accordingly. ( V. K. JADHAV, J.) ( A. V. NIRGUDE, J. ) rlj/

TA79.13 -3-

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