Rohit Mills Ltd. V. Commissioner of Income Tax

ITR/269/1987

AI Insights

The case involves multiple questions referred to the High Court of Gujarat by the Income Tax Appellate Tribunal Ahmedabad Bench 'A' under section 256(1) of the Income-tax Act, 1961. The questions pertained to the interpretation and application of various provisions of the Income-tax Act concerning disallowances and deductions related to medical expenses, contributions to export promotion funds, and insurance premiums, among others. The court's decisions were based on precedents and interpretations of the relevant sections of the Act, leading to a mix of rulings that either favored the revenue or the assessee depending on the specific circumstances of each question.

• Counselvise Citation: [2002] 140 COUNSELVISE.COM (IT) 795698 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 04-12-2002
• Assessment Year: misc
• Other Referred Cases: Ambica Mills Ltd. v. CIT, Wintex Ltd. v. CIT, CIT v. Suhas Vadilal, CIT v. Cama Motors Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: MANISH BHATT
• Assessee Lawyers: J P SHAH
• Keywords: Disallowance; Income Tax; Medical expenses; Personal Accident Insurance; Weighted deduction; Export Promotion Fund
• Section: 35B; 256(1); 40(c)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 269 of 1987 For Approval and Signature: Hon'ble MR.JUSTICE A.R.DAVE and Hon'ble MR.JUSTICE K.M.MEHTA ============================================================ 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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- ROHIT MILLS LTD. Versus COMMISSIONER OF INCOME TAX -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 269 of 1987 MR JP SHAH for Petitioner No. 1 MR MANISH R BHATT for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE K.M.MEHTA Date of decision: 04/12/2002 ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE) At the instance of the revenue as well as the applicant-assessee, the following questions have been referred to this court for its opinion by the Income Tax Appellate Tribunal Ahmedabad Bench 'A' under the provisions of sec. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') : At the Instance of the Revenue 1. Whether, in law and on facts, reimbursement of medical expenses is required to be excluded while computing disallowance under section 40(c) of the Income-tax Act, 1961? 2. Whether, in law and on facts, the contribution to an export promotion fund of the Indian Cotton Mills Federation is exigible to weighted deduction under section 35B of the I.T. Act, 1961? 3. Whether, in law and on facts, while considering the sale consideration of shares of Rajesh Textile Mills Ltd. the fall in the value of share of Sayaji Mills Ltd., has to be taken into account? 4. Whether, in law and on facts, premium paid for personal accident insurance policies is required to be excluded while computing disallowance under section 40(c) of the Income-tax Act, 1961? At the Instance of the Assessee \"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the commission paid by the appellant to the Directors of the company should be included in the remuneration for the purposes of determining the disallowance u/s 40(c) of the Act?\" 2. Learned advocate Shri M.J. Shah has appeared for the applicant-assessee whereas Sr. Central Government Standing Counsel Shri M.R. Bhatt has appeared for the revenue. 3. So far as the first question, which has been referred to this court at the instance of the revenue is concerned, it pertains to disallowance under the provisions of sec. 40(c) of the Act where the medical expenditure was incurred by the assessee company for its employees. Upon hearing the learned advocates and looking to the law laid down by this court in the case of Ambica Mills Ltd. v. CIT, 235 ITR 264, in our opinion, the said question deserves to be answered in the negative because the expenditure incurred is not to be excluded while computing the disallowance u/s 40(c) of the Act. We, therefore, answer the question in the negative, i.e., against the assessee and in favour of the revenue. 4. So far as the second question is concerned, it pertains to contribution to an export promotion fund of the Indian Cotton Mills Federation. The question is whether such an expenditure is exigible to weighted deduction u/s 35B of the Act. 5. We have heard the learned advocates and looking to the law laid down by this court in the case of Wintex Ltd. v. CIT, 104 CTR 232, we answer this question in the negative as such an expenditure is not exigible to weighted deduction. We, therefore, answer the question against the assessee and in favour of the revenue. 6. So far as the third question is concerned, upon hearing the learned advocates and looking to the law laid down by this court in the case of CIT v. Suhas Vadilal, 239 ITR 362, we are of the view that the question should be decided against the revenue and in favour of the assessee because, looking to the law laid down by this court, the depreciation in the value of shares of Rajesh Textile Mills will have to be considered while valuing the shares of Sayaji Mills. We, therefore, answer the question in the affirmative i.e. against the revenue and in favour of the assessee. 7. So far as the 4th question, which has been referred to this court at the instance of the revenue is concerned, it pertains to premium paid by the assessee company for personal accident insurance policy of the Director. Looking to the peculiar facts of the case and looking to the judgment delivered by this court in the case of CIT v. Cama Motors Pvt. Ltd. 234 ITR 699, we answer the question in the affirmative, i.e., in favour of the assessee and against the revenue. 8. So far as the question which has been referred to this court at the instance of the assessee is concerned, looking to the law laid down by this court in the case of assessee itself for the earlier year reported in 129 ITR 228, we answer the question in the affirmative, i.e., against the assessee and in favour of the revenue. In view of the opinion rendered hereinabove, the reference is disposed of with no order as to costs. (A.R. Dave, J.) (K.M. Mehta, J.) (hn) "