COMMISSIONER OF INCOME TAX V. RAMESHCHANDRA S. PATEL

TAXAP/663/2006

AI Insights

The case revolves around two substantial questions of law concerning the interpretation of deductions under Sections 80HHC and 80IA of the Income Tax Act, 1961. The Commissioner of Income Tax appealed against the ITAT's decision, which had upheld the CIT(A)'s ruling that excise duty and sales-tax receipts should not be considered in the total turnover for the purpose of working out deductions under Section 80HHC. Additionally, the ITAT had ruled that interest earned on deposits should be included in the deductions under Section 80IA. The High Court, referencing decisions from the Supreme Court and ITAT's Special Bench, affirmed the lower authorities' decisions.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 699276 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 03-12-2013
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-tax Vs. Lakshmi Machine Works, Lalsons Enterprises Vs. DCIT, ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income-tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SWATI SOPARKAR
• Assessee Lawyers: PAURAMI SHETH
• Keywords: Deduction; Deposit; Excise Duty; Interest Earned; Sales Tax; Total Turnover; Surplus fund
• Section: 56; 80HHC; 80IA

Judgement Text

"O/TAXAP/663/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 663 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA ====================================== 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....Appellant(s) Versus RAMESHCHANDRA S. PATEL....Opponent(s) ====================================== Appearance: MS PAURAMI B SHETH, 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 : 03/12/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 4 O/TAXAP/663/2006 JUDGMENT 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal (hereinafter referred to as ‘ITAT’) dated 16/08/2005 in ITA No. 2162/Ahd/1999 for the Assessment Year 1995-96, the revenue has preferred the present Tax Appeal. 2. While admitting the present Tax Appeal, the following substantial questions of law are framed; “(A) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) holding that excise duty and sales-tax receipts are not to be considered in the total turnover for the purpose of working out deduction under Section 80HHC of the Act? (B) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) holding that interest earned on deposit is to be included for the purpose of working of deduction under Section 80IA?” 3. Having heard Ms. Paurami Sheth, learned Counsel appearing on behalf of the appellant-revenue and Shri S.N. Soparkar, learned Counsel appearing on behalf of the opponent-assessee, it appears that the substantial question of law no. (A), “whether the appellate tribunal is right in law and on facts in confirming the order passed by the CIT(A) holding that excise duty and sales-tax receipts are not to be considered in the total turnover for the purpose of working out deduction under Section 80HHC of the Act”, is squarely covered by the decision of the Hon’ble Supreme Court in the Page 2 of 4 O/TAXAP/663/2006 JUDGMENT case of Commissioner of Income-tax Vs. Lakshmi Machine Works reported in [2007] 290 ITR 667 against the revenue. The aforesaid is not disputed by Ms. Sheth, learned Counsel appearing on behalf of the revenue. Applying the ratio laid down by Hon’ble the Supreme Court in the case of Lakshmi Machine Works (Supra), question no. (A) is answered against the revenue. 4. So far as question of law no. (B) framed by this Court, while admitting the present appeal is concerned, the same is modified as under; “Whether on the facts and circumstances of the case, ITAT has erred in holding that in holding that interest earned on deposit is to be included for the purpose of working of deduction under Section 80 IA ignoring that interest receipts are incidental to the deposit of surplus fund of the assessee to be taxed under Section 56 of the Income Tax Act?” 4.1. It appears that while disposing of the appeal, ITAT has relied upon the decision of Special Bench of the ITAT, Delhi in the case of Lalsons Enterprises Vs. DCIT reported in [2004] 89 ITD 24. It is reported that the said decision has been subsequently approved by Hon’ble the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. Vs. Commissioner of Income-tax reported in [2012] 343 ITR 89 (SC). The aforesaid is not disputed by Ms. Paurami Sheth, learned Counsel appearing on behalf of the revenue. Under the circumstances, question no. (B) is also held against the revenue. Page 3 of 4 O/TAXAP/663/2006 JUDGMENT 5. Under the circumstances and for the reasons stated hereinabove, the present appeal deserves to be dismissed and is accordingly dismissed. No costs. (M.R.SHAH, J.) (R.P.DHOLARIA,J.) Siji Page 4 of 4 "