COMMISSIONER OF INCOME TAX V. LAXMI CEMENT DISTRIBUTORA (P) LTD.

ITR/226/1994

AI Insights

The case involves two Income Tax References (No.54 of 1995 and No.226 of 1994) concerning Laxmi Cement Distributors Pvt. Ltd. and the Commissioner of Income Tax, Rajkot. The references were related to the applicability of Section 37(3B) of the Income-tax Act, 1961, and the cancellation of an order by the Commissioner under Section 263 of the Act. The Tribunal had consolidated both references and allowed the assessee's appeal against the Commissioner's order while dismissing the departmental appeal on merits. The High Court of Gujarat, upon reviewing the Tribunal's decision, found that the Tribunal had not addressed any substantial question of law and thus returned the references unanswered.

• Counselvise Citation: [2005] 140 COUNSELVISE.COM (IT) 717965 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 21-11-2005
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: NOTICE SERVED
• Assessee Lawyers: MANISH BHATT
• Keywords: Assessment Order; Departmental appeal; Income Tax; Revisional proceedings; Sales Organisers
• Section: 263; 256(1); 37(3A); 37(3B)

Judgement Text

"ITR/54/1995 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.54 of 1995 With INCOME TAX REFERENCE No.226 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- HONOURABLE MS.JUSTICE H.N.DEVANI Sd/- ===================================================== 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(s) Versus LAXMI CEMENT DISTRIBUTORS PVT.LTD. - Respondent(s) ======================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ======================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 21/11/2005 COMMON ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) ITR/54/1995 2/4 JUDGMENT 1. In Income Tax Reference No.226 of 1994, the following question has been referred by Income Tax Appellate Tribunal, Ahmedabad Bench 'C' under Section 256(1) of the Income-tax Act, 1961 (the Act) at the instance of the Revenue: “Whether on the facts and in the circumstances of the case, the Tribunal was right in cancelling the order of the C.I.T. under sec. 263 of the Act?” 2. While in Income Tax Reference No.54 of 1995, the following question has been referred: “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the commission etc. paid to sales organisers was not caught by the mischief of sec.37(3A)/37(3B)?” 3. The Tribunal has passed consolidated order and hence, both the references are taken up for hearing together. The Assessment Year is 1985-86 in both the references. 4. The Commissioner of Income-tax (Commissioner of Income-tax), Rajkot initiated revisional proceedings under Section 263 of the Act and ITR/54/1995 3/4 JUDGMENT passed an order on 15th March, 1989 holding that original assessment order was erroneous and prejudicial to the interests of the Revenue on the question of applicability of Section 37(3B) of the Act. The assessee challenged the same before the Tribunal. 5. When the appeal came up for hearing before the Tribunal, the assessment in the second round had been framed and hence, the controversy on merits was also before the Tribunal by way of departmental appeal. 6. The Tribunal vide its order dated 18th October, 1993 allowed the assessee's appeal against order under Section 263 of the Act and dismissed the departmental appeal on merits. On going through the impugned order of the Tribunal, it is apparent that it has recorded various findings of fact after appreciating the evidence on record and in the circumstances, in absence of any question of law, the Court is not bound to answer the reference made by the Tribunal. The references are, therefore, returned unanswered. ITR/54/1995 4/4 JUDGMENT 7. Before parting it is necessary to take note of the fact that the Tribunal has, unfortunately, proceeded in a wrong manner by putting cart before horse as can be seen from its own observations in the opening portion of Paragraph No.3 of the impugned order which reads as under: “3. Though Chronologically order u/s.263 and appeal to the Tribunal against that order come first, it would be better, for the facility of exposition, first to consider and decide the department's appeal which is on merits. .....” 8. In the result, both the references are left unanswered and stand disposed of accordingly. 9. Registry to place a copy of this order in connected matter. Sd/- [ D.A. MEHTA, J ] Sd/- [ H.N. DEVANI, J ] *** Bhavesh* "