PARIKH ENTERPRISES PVT LTD V. COMMISSIONER OF INCOME-TAX

ITR/168/1988

AI Insights

The case involves Parikh Enterprises Pvt Ltd, the petitioner, contesting the disallowance of interest by the Income Tax Officer under Section 40A(8) of the Income Tax Act for the assessment year 1982-83. The initial disallowance was upheld by the CIT (Appeals) and subsequently by the Tribunal. The primary legal question referred to the High Court was whether the Tribunal was justified in confirming this disallowance. The court's decision was heavily influenced by its earlier ruling in CIT vs. Navjivan Roller and Pules Mills, which provided a detailed interpretation of Section 40A(8).

• Counselvise Citation: [2002] 140 COUNSELVISE.COM (IT) 693337 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 05-07-2002
• Assessment Year: misc
• Other Referred Cases: CIT vs. Navjivan Roller and Pules Mills
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B B NAIK
• Assessee Lawyers: S N DIVETIA
• Keywords: Disallowance of interest; Income Tax; Section 40A(8); Unit No.I
• Section: 40A(8)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 168 of 1988 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO 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? : NO @ PARIKH ENTERPRISES PVT LTD Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 168 of 1988 MR SN DIVETIA for Petitioner No. 1 MR BB NAIK for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ Date of decision: 05/07/2002 ORAL JUDGEMENT (Per : MR.JUSTICE K.A.PUJ) At the instance of the assessee, the following question of law is referred for the opinion of this Court:- \"Whether on the facts and circumstances of the case, the Tribunal was justified in confirming the disallowance of interest of Rs.20,838/- in respect of Unit No.I, u/s.40A(8) of the Act?\" 2. The assessment year involved is assessment year 1982-83. The Income-tax Officer has disallowed the interest under Section 40 A(8) of the Act. Being aggrieved by the said decision, the assessee has preferred an appeal before the CIT (Appeals) who has confirmed the said disallowance and the assessee has preferred the second appeal against the order of CIT (Appeals) confirming the disallowance of interest made by the Income-tax Officer. 3. Heard Mr SN Divetia learned advocate appearing for the assessee and Mr BB Naik learned Standing Counsel appearing for the respondent. 4. At the time of hearing of this Reference, our attention is drawn to the decision of this Court in the case of CIT vs. Navjivan Roller and Pules Mills, (2001) 251 ITR 661 wherein this Court has discussed in detail the provisions contained in Section 40 A(8) of the Act and has also considered the decisions of Bombay, Madras and Madhya Pradesh High Courts. While agreeing with the view of Bombay and Madras High Courts and dissenting from the view taken by the Madhya Pradesh High Court, this Court has held that any interest paid on any money received by the Company other than a banking company or a financial company which does not fall in any of the exceptions contained in clauses (i) to (viii) of Explanation (b) to Section 40 A(8) and its deduction, which is an allowable expenditure, is governed by Section 40 A(8) during its operation. 5. Since the issue raised in the present reference is squarely covered by the decision of this Court in the above case, we are of the view that the Tribunal was justified in confirming the disallowance of interest of Rs.20,838/- under Section 40 A(8)_ of the Act in respect of Unit No.I. We, therefore, answer this question in the affirmative i.e. in favour of the revenue and against the assessee. 6. The Reference is accordingly disposed of with no order as to costs. (M.S. Shah,J) (K.A. Puj,J) zgs/- "