COMMISSIONER OF INCOME TAX V. FAG PRECISION BEARING LTD.

ITR/5/1994

AI Insights

The case revolves around the modification of orders under Section 154 of the Income Tax Act for the Assessment Years 1990-91 and 1991-92 concerning unabsorbed investment allowances from earlier years. The Assessing Officer initially included these allowances but later disallowed them based on Section 115J(2) and a CBDT Circular. The Tribunal reversed the Assessing Officer's decision, stating that such modifications require obvious and patent mistakes, referencing a CBDT Instruction. The Revenue's appeal to the High Court sought to challenge the Tribunal's interpretation and application of these provisions.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 702356 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 22-09-2008
• Assessment Year: misc
• Other Referred Cases: Gujarat Petrosynthese Limited & Another vs. P.L. Rungta & Others in Special Civil Application No.1245 of 1993
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S N SOPARKAR; SWATI SOPARKAR
• Assessee Lawyers: MANISH BHATT; MAUNA BHATT
• Keywords: Prima-facie adjustment; Unabsorbed Investment Allowance; CBDT Circular No.495; Instruction No.1814
• Section: 154; 143(1)(a); 115J; 115J(2)

Judgement Text

"ITR/519/1994 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.5 of 1994 For Approval and Signature: HONOURABLE MR. JUSTICE D. A. MEHTA AND HONOURABLE MR. JUSTICE BANKIM N. MEHTA ========================================================= 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? ========================================================= = COMMISSIONER OF INCOME TAX - Applicant Versus FAG PRECISION BEARING LTD. - Respondent ========================================================= = Appearance : MR MANISH R BHATT WITH MRS MAUNA M BHATT for Applicant. MR SN SOPARKAR WITH MRS SWATI S SOPARKAR for Respondent. ========================================================= = CORAM : HONOURABLE MR. JUSTICE D. A. MEHTA and HONOURABLE MR. JUSTICE BANKIM N. MEHTA Date : 22/09/2008 ORAL JUDGMENT (Per : HONOURABLE MR. JUSTICE D. A. MEHTA) 1. This Reference at the instance of Revenue has ITR/519/1994 2/4 JUDGMENT raised the following question of law: “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in modifying the orders u/s.154 for A.Y. 1990-91 and 1991-92?” 2. The Assessment Years in question are 1990-91 and 1991-92. For both the years, unabsorbed investment allowance relatable to Assessment Years 1982-83 to 1989-90 was excluded by virtue of provisions of Section 115J of the Income Tax Act, 1961 [the Act]. The Assessing Officer accepted the return of income under Section 143(1)(a) of the Act and no prima facie adjustment was made. Subsequently, on 31.08.1992 orders were framed under Section 154 of the Act by the Assessing Officer placing reliance on Section 115J(2) of the Act as well as CBDT Circular No.495 and the Assessing Officer disallowed unabsorbed investment allowance to the extent such amount was allowed to be carried forward and set off while computing the income under Section 115J of the Act. 3. The assessee carried matter in appeal before ITR/519/1994 3/4 JUDGMENT Commissioner (Appeals), but did not succeed. However, in Second Appeal Tribunal held that prima facie adjustments were permissible only in respect of obvious and patent mistake. The Tribunal also referred to and relied upon Instruction No.1814 dated 04.04.1989 issued by CBDT. 4. It is common ground between the parties that the controversy raised in the present Reference is identical to the controversy raised in the case of Gujarat Petrosynthese Limited & Another vs. P.L.R ungta & Others in Special Civil Application No.1245 of 1993. Hence, for the sake of brevity, it is not necessary to reiterate the respective contentions in detail. 5. Therefore, for the reasons stated in the judgment of even date rendered in the case of Gujarat Petrosynthese Limited & Another vs. P.L.R ungta & Others in Special Civil Application No.1245 of 1993, the question referred for the opinion of this Court is answered in the ITR/519/1994 4/4 JUDGMENT affirmative, i.e. in favour of the assessee and against the Revenue. Reference stands disposed of accordingly with no orders as to costs. [D. A. Mehta, J.] [Bankim N. Mehta, J.] Rajendra "