Ambica Specific Family Trust V. Asstt. C I T

TAXAP/415/2000

AI Insights

The case involves Ambica Specific Family Trust, the appellant, contesting the decision of the Income Tax Appellate Tribunal, which had reversed the earlier findings allowing a deduction under section 80-I for income from the sale of gunny bags. The Tribunal had relied on the Supreme Court's decision in CIT v. Sterling Foods, which the High Court found was not applicable in this context. The High Court, referencing the Supreme Court's decision in Commissioner of Income-tax v. Nirma Ltd., concluded that the income from the sale of gunny bags is indeed part of the income of the industrial undertaking and is entitled to the deduction under section 80-I.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 687719 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 25-11-2014
• Assessment Year: misc
• Other Referred Cases: CIT v. Sterling Foods, Commissioner of Income-tax v. Nirma Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR; S N SOPARKAR
• Keywords: Deduction; Income Tax; Industrial Undertaking; Tax appeal; Sale of Gunny Bags
• Section: 260A; 80I

Judgement Text

"O/TAXAP/415/2000 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 415 of 2000 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 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 ? ================================================================ AMBICA SPECIFIC FAMILY TRUST....Appellant(s) Versus ASSTT. C I T....Opponent(s) ================================================================ Appearance: MR BS SOPARKAR ADVOCATE FOR MR SN SOPARKAR SR. ADVOCATE for the Appellant(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and Page 1 of 4 O/TAXAP/415/2000 JUDGMENT HONOURABLE MR.JUSTICE K.J.THAKER Date : 25/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. This Tax Appeal u/s.260A of the Income-tax Act, 1961 is filed against the judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench in ITA No.2855/AHD/1993 & 2583/AHD/1993 dated 03.07.2000 for the A.Y. 1986- 87 whereby, both the appeals were partly allowed. 2. Briefly stated, the assessee-firm is engaged in the business of manufacturing detergent powder. The assessee filed its return of income for the A.Y. 1986-87. Assessment scrutiny was undertaken. However, subsequently, vide order dated 30.12.1992 passed by the CIT(A), the Assessment Order was directed to allow deduction u/s.80I of the Act. Pursuant thereto, the Assessment Order was revised, vide order dated 27.01.1993 passed by the A.O whereby, deduction u/s.80I was allowed. 3. Against the above order, appeal was preferred before the CIT(A). The CIT(A) came to the conclusion that used Acid was a direct result of the industrial activity and that the cost of gunny bags was either debited to the trading account of the Industrial Undertaking along with Page 2 of 4 O/TAXAP/415/2000 JUDGMENT the cost of raw materials and therefore, the realization by way of sales of empty gunny bags should form part of the income of Industrial Undertaking and accordingly, partly allowed the appeal, vide order dated 20.05.1993. 4. Being aggrieved by the aforesaid order, appeals were preferred both by the assessee as well as the Revenue before the Appellate Tribunal. However, the Appellate Tribunal reversed the finding of the CIT(A) vide order dated 03.07.2000 and held that profit generated from the sale of gunny bags cannot be called as profit derived from the Industrial Undertaking by relying upon the decision of Apex Court in the case of CIT v. Sterling Foods, [1999] 237 ITR 579 (SC). 5. While admitting the appeal on 29.11.2000, the following substantial question of law was formulated for our consideration; “Whether in law and in facts and circumstances of the appellant’s case, the Tribunal was justified in holding that deduction u/s.80-I should not be allowed on the sales of gunny bags as income forming part of Industrial Undertaking?” Page 3 of 4 O/TAXAP/415/2000 JUDGMENT 6. We have heard learned counsel for both the sides. The issue involved in this appeal is already concluded by a decision of the Apex Court in the case of Commissioner of Income-tax v. Nirma Ltd., [2014] 367 ITR 12 (Guj) wherein, it has been held that income derived from the sale of scrap and waster, gunny bags, etc. is entitled to Special Deduction u/s.80-I of the Act. 7. Learned Standing Counsel appearing for the Revenue was not in a position to dispute the proposition of law laid down in the above decision. Since the issue is covered by the aforesaid decision, no elaborate reasons are assigned while disposing of this appeal. 8. In view of the aforesaid, the question raised in this appeal is answered in favour of the assessee and against the Revenue. The appeal stands disposed of accordingly. (K.S.JHAVERI, J.) (K.J.THAKER, J) Pravin/* Page 4 of 4 "