Purshottam P. Patel V. Dy Commissioner of Income Tax

SCA/1351/1998

AI Insights

The case revolves around a challenge to a notice issued by the Deputy Commissioner of Income Tax under Section 148 of the Income-Tax Act, 1961, alleging that income had escaped assessment due to a wrongly allowed investment allowance. The petitioner, Purshottam P. Patel, had claimed an investment allowance for the Assessment Year 1985-1986, which was initially granted but later contested based on a Supreme Court decision that excluded certain construction businesses from such allowances. The High Court of Gujarat, referencing a similar case, quashed the notice, thereby ruling in favor of the petitioner.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 672374 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 30-06-2008
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME-TAX Vs N.C. BUDHARAJA AND Co. AND ANR., AUSTIN ENGINEERING CO. LTD Vs JOINT COMMISSIONER OF INCOME-TAX
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MANISH BHATT
• Assessee Lawyers: S N SOPARKAR
• Keywords: Assessment Year; Income Tax; Investment allowance; Supreme Court decision
• Section: 148; 143(3); 32(A)

Judgement Text

"SCA/1351/1998 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 1351 of 1998 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA AND HONOURABLE MR.JUSTICE H.B.ANTANI ========================================= 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 ? ========================================= PURSHOTTAM P PATEL - Petitioner(s) Versus DY COMMISSIONER OF INCOME TAX - Respondent(s) ========================================= Appearance : MR SN SOPARKAR for Petitioner(s) : 1, MR MANISH R BHATT for Respondent(s) : 1, ========================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE H.B.ANTANI SCA/1351/1998 2/3 JUDGMENT Date : 30/06/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1. This petition challenges notice dated 16/02/1996 issued under Section 148 of the Income-Tax Act, 1961 (the “Act”) by the respondent authority. The Assessment Year in question is 1985-1986. The assessment under Section 143(3) of the Act was framed by the Assessing Officer vide assessment order dated 11/03/1988. The assessee claimed investment allowance to the tune of Rs. 29,64,477/-. In principle, the Assessing Officer, after considering the submissions of the assessee and after making inquiries, allowed the claim in the following words; “In view of the above said decision, I am of the opinion that the assessee is entitled for investment allowance” 2. However, the claim was restricted to the extent of positive income available. 3. Admittedly, the impugned notice has been issued beyond a period of 4 years from the end of the relevant Assessment Year on the basis of Supreme Court decision in the case of COMMISSIONER OF INCOME-TAX Vs N.C. BUDHARAJA AND Co. AND ANR., (1993)204 ITR 412. The reasons recorded by the Assessing Officer read as under; “The assessee is engaged in the construction business. The assessee purchased certain machinery in the previous year relevant to Assessment Year 1985-86 and claimed investment allowance under the provisions of SCA/1351/1998 3/3 JUDGMENT Section 32-A of the Income-Tax Act. The Hon'ble Supreme Court in the case of N.C. BUDHRAJA & Co. reported in 204 ITR has held that the investment allowance is not allowable to the persons engaged in the construction of dam, canals etc. In view of this, the investment allowance was wrongly allowed to the assessee in the year under reference. I have reasons to believe that the income amounting to Rs. 29,67,477/- has escaped assessment on account of wrong allowance of investment allowance to the assessee.” 4. It is an accepted position between the parties that in similar fact situation, this Court has, by a reasoned judgement rendered on 18/06/2008, decided the controversy between the parties in the case of AUSTIN ENGINEERING CO. LTD Vs JOINT COMMISSIONER OF INCOME-TAX, Special Civil Application No. 12050/2000 and cognate matters. Hence, it is not necessary to set out the facts and contentions in detail. 5. For the reasons stated in the aforesaid judgement dated 18/06/2008 in the case of AUSTIN ENGINEERING CO. LTD (Supra), the impugned notice dated 16/02/1996 is quashed for the Assessment Year 1985-1986. The petition is allowed accordingly. Rule made absolute with no order as to costs. (D.A. MEHTA, J.) (H.B. ANTANI, J.) siji "