PACKART PRIVATE LIMITED V. COMMISSIONER OF INCOME-TAX

ITR/105/1984

AI Insights

The case involves Packart Private Limited, which appealed against the decisions of the Income Tax Appellate Tribunal concerning disallowed gratuity liabilities and a development rebate. The Tribunal had disallowed a claim of gratuity liability amounting to Rs. 65,149 for the assessment year 1976-77 and Rs. 95,021 for 1977-78, under Sections 28 and 37 of the Income Tax Act. Additionally, the Tribunal denied a development rebate of Rs. 9,290 on the enhanced value of assets arising from an exchange loss of Rs. 61,460 for the same assessment year, despite depreciation being admissible. The High Court's decision was influenced by precedents set by the Supreme Court in similar cases.

• Counselvise Citation: [1997] 140 COUNSELVISE.COM (IT) 727622 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 31-01-1997
• Assessment Year: misc
• Other Referred Cases: Shree Sajjan Mills Vs. CIT, CIT Vs. Arvind Mills
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: BHARAT SHELAT; MANISH BHATT
• Assessee Lawyers: D A MEHTA; R K PATEL; B D KARIA; K C PATEL
• Keywords: Depreciation; Development rebate; Exchange loss; Gratuity liability
• Section: 37; 28

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 105 of 1984 For Approval and Signature: Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE R.BALIA. ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------------- PACKART PRIVATE LIMITED Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: MR D.A. MEHTA, MR R.K. PATEL, MR B.D. KARIA for MR KC PATEL for Petitioner MR BHARAT J. SHELAT, instructed by MR MANISH R BHATT for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE R.BALIA. Date of decision: 31/01/97 ORAL JUDGEMENT (Per R.K.Abichandani,J.) The Income Tax Appellate Tribunal, Ahmedabad has referred for the opinion of this Court the following questions:- ASSSSMENT YEAR 1976-77: 1. \"Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the disallowance of claim of gratuity liability of Rs. 65,149/- made by the assessee u/s 28 and or Section 37 of the Act?\" 2. \"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was not entitled to development rebate amounting to Rs. 9,290/- on the enhanced value of the assets arising out of exchange loss of Rs. 61,460/- even though depreciation is admissible on the same?\" ASSESSMENT YEAR 1977-78: 1. \"Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the disallowance of claim of gratuity liability of Rs. 95,021/- made by the assessee u/s 28 and or Sec.37 of the Act?\" The learned Counsel for the assessee points out to us that the question No.1 for the assessment year 1976-77 and the question for the assessment year 78-79 referred to us are squarely covered by the decision of the Supreme Court in Shree Sajjan Mills Vs. CIT, reported in 156 ITR 585. Applying the said decision, we hold that the Tribunal was justified in law in confirming the disallowance of claim of gratuity liability made by the assessee under Section 28/37 of the I.T Act in respect of these two assessment years. Both these questions referred to us are therefore, answered in the affirmative against the assessee. As regards the question No.2, it is pointed out to us by the Counsel for the assessee that the same is concluded against the assessee by a decision of the Supreme Court in CIT Vs. Arvind Mills, reported in 193 ITR 255. Applying the said decision, we hold that the Tribunal was right in holding that the assessee was not entitled to development rebate amounting to Rs. 9,290/- on the enhanced value of the assets arising out of the exchange loss of Rs. 61,460/eventhough the depreciation was admissible on the same. The said question is therefore, answered in the affirmative against the assessee. The reference stands disposed of accordingly with no order as to costs. --- "