COMMISSIONER OF INCOME TAX V. NACHMO MARKETING PVT. LTD.

TAXAP/14/2006

AI Insights

The case involves the Commissioner of Income Tax as the appellant and Nachmo Marketing Pvt. Ltd as the respondent. The core issue was whether the deductions under Section 80HH and 80I of the Income Tax Act were permissible on the gross total income of the assessee, which included compensation received due to a breach of contract. The ITAT had previously dismissed the revenue's appeal, relying on decisions from the Bombay and Madhya Pradesh High Courts, which the Gujarat High Court found to be inapplicable to the issue at hand. The High Court noted the lack of discussion on the specific issue by the ITAT and decided to remit the matter back for a fresh consideration.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 728645 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 30-11-2013
• Assessment Year: misc
• Other Referred Cases: Nima Specific Trust vs. CIT, J.P. Tobacco Products (P) Ltd vs. CIT M.P
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SWATI SOPARKAR
• Assessee Lawyers: VARUN PATEL
• Keywords: Breach of contract; Compensation; Deduction; Gross Total Income; Income Tax
• Section: 80HH; 80I

Judgement Text

"O/TAXAP/14/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 14 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH ­ sd/­ and HONOURABLE MR.JUSTICE R.P.DHOLARIA sd/­ ============================================= 1. Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 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 ? NO 5. Whether it is to be circulated to the civil judge ? NO ============================================= COMMISSIONER OF INCOME TAX....Appellant(s) Versus NACHMO MARKETING PVT. LTD.....Opponent(s) ============================================= Appearance: MR.VARUN K.PATEL, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA Date : 30/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. Leave to replace Annexure B. 2.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad (hereinafter referred to as the “ITAT”) dated Page 1 of 3 O/TAXAP/14/2006 JUDGMENT 29.12.2004 passed in ITA No. 590/AHD/1998 for the AY 1988­89, the revenue has preferred present Tax Appeal to consider the following substantial question of law. “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) holding that deduction under Section 80HH and 80I was allowable on gross total income including compensation received by the assessee on account of breach of contract?” 3.0. Having heard Shri Varun Patel, learned advocate for the revenue and Shri S.N. Soparkar, learned Senior Advocate for the respondent­assessee and considering the impugned judgment and order passed by the learned ITAT, it appears that the Appellate Tribunal has dismissed the said appeal preferred by the revenue by observing that the issue in controversy is covered by the decision of the Bombay High Court in the case of Nima Specific Trust reported in 248 ITR 29 and the decision of the Madhya Pradesh High Court in the case of J.P. Tobacco Products (P) Ltd vs. CIT M.P reported in (1998) 229 ITR 123. It is required to be noted that as such the issue before the learned Appellate Tribunal was with respect to the deduction under Section 80HH and 80I was allowable on gross total income including compensation received by the assessee on account of breach of contract or not. On considering the decision of the Bombay High Court in the case of Nima Specific Trust (supra) and the decision of the Madhya Pradesh High Court in the case of J.P. Tobacco Products (P) Ltd (supra), it appears that no such issue was there in the aforesaid cases. Under the circumstances, learned Tribunal has materially erred in relying upon those decisions. Apart from that, even there is no discussion at all by the learned Tribunal with respect to the issue involved i.e. Whether the deduction under Section 80HH and 80I was allowable on gross total income including compensation received by the assessee on account of breach of contract Page 2 of 3 O/TAXAP/14/2006 JUDGMENT or not. Under the circumstances, the impugned judgment and order passed by the learned Tribunal deserves to be quashed and set aside and the matter is to be remitted to the file of the learned ITAT to consider the aforesaid issue afresh in accordance with law and on merits. 4.0. In view of the above, present appeal succeeds. The impugned judgment and order passed by the ITAT dated 29.12.2004 passed in ITA No. 590/AHD/1998 is hereby quashed and set aside and the matter is remitted to the learned Tribunal to decide the issue involved i.e. Whether the deduction under Section 80HH and 80I was allowable on gross total income including compensation received by the assessee on account of breach of contract or not afresh. Appeal is allowed to the aforesaid extent. sd/­ (M.R.SHAH, J.) sd/­ (R.P.DHOLARIA,J.) Kaushik Page 3 of 3 "