M/S VIJAY OIL MILLS ALWAR V. THE COMMISSIONER OF INCOME TAX

ITAP/3/2003

AI Insights

The case revolves around the interpretation of deductions under Section 80HH and 80I of the Income Tax Act, concerning how these should be computed in relation to the profits and gains of a business after accounting for depreciation and investment allowances. M/S Vijay Oil Mills, the petitioner, contested the method of computation adopted by the tax authorities. The High Court referenced several precedents and a pending Supreme Court decision to conclude that the deductions should be computed as per the profits and gains after the specified deductions. The court's decision was influenced by earlier rulings and the anticipation of a Supreme Court judgment that could potentially affect the outcome.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 684548 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 17-01-2017
• Assessment Year: misc
• Other Referred Cases: Vijay Solvex Ltd. Vs. Commissioner of Income Tax, Alwar, Vijay Industries Vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: PARINITOO JAIN
• Assessee Lawyers: P K KASLIWAL; ANANT KASLIWAL
• Keywords: Deduction; Depreciation; Income Tax; Investment allowance; Profits and Gains; Section 80HH; Section 80I
• Section: 80HH; 80I

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Application No. 3 / 2003 M/S Vijay Oil Mills Alwar ----Petitioner Versus The Commissioner Of Income Tax ----Respondent _____________________________________________________ For Petitioner(s) : Mr. P.K. Kasliwal and Mr. Anant Kasliwal For Respondent(s) : Ms Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Judgment 17/01/2017 1. In this reference, following question was framed vide order dated 24.11.2003: “Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that deduction under Section 80HH and 80I be computed out of the income and computed under the Income Tax Act i.e. out of the profits and gains after deduction of depreciation and investment allowance.” 2. However, in view of the subsequent decision of this Court dated 7.12.2016 in Tax Appeal No. 879/2008 wherein it has been held as under: “However, in view of the subsequent decision of this Court, dated 24.02.2015 in DB Income Tax Appeal No.125/2004 in case of Vijay Solvex Ltd. Vs. Commissioner of Income Tax, Alwar and DB Income Tax Appeal No.185/2004 decided on 06.01.2014 in case of Vijay Solvex Ltd. vs. Commissioner of Income Tax, Alwar, the issue is required to be answered in favour of the department and against (2 of 3) [ITAP-3/2003] the assessee. However, Mr. Kasliwal contended that the issue is pending before the Supreme Court in M/s Vijay Industries Vs. Commissioner of Income Tax, Civil Appeal Nos. 1581-1582 of 2005 wherein the matter has been referred a Larger Bench in view of the observations made in para 7 & 8:- 7. The finding in paragraph 4 in Motilal Pesticides (supra) that the language of Section 80-HH and Section 80-M is the same is, with respect, prima facie, incorrect. Conceptually, “any income” and “profits and gains” are different under the Income Tax Act. (See Section 80-M read with Sections 80-AA & AB, Section 80-T which speak of “any income” and Section 28 which speaks of “income from profits and gains” showing thereby that conceptually the two expressions are understood as distinct in law). 8. In paragraph 5 of the judgment in Motilal Pesticides (supra), Shri Ramamurthi, learned senior counsel appearing for the appellant submitted that both Cloth Traders and Distributors (Baroda) were cases which pertained to Section 80-M only and this Court had no occasion to consider the application of Section 80-AB with reference to Section 80- HH of the Act. The Court in repelling this contention referred to another decision in H.H. Sir Rama Verma V.CIT (1994) Supra (1) SCC 473, which judgment dealt with the then newly enacted Section 80-AA and 80-AB. Both these sections again are relatable to deductions made under Section 80-M; and Section 80-T with which that judgment was concerned also uses the expression “any income” as opposed to “profits and gains”. It will be clear, therefore, that prima facie Verma's case again has very little to do with the concept of “profits and gains” with which we are concerned here. For these reasons, the matters be placed before the Hon'ble Chief Justice of India to constitute an appropriate Bench to consider the correctness of the judgment in Motilal Pesticides (supra).” We have heard both the sides. Following the decision of this Court in case of the same assessee, the issue is answered in favour of the department and against the assessee. It is made clear that the decision of Supreme Court in Civil Appeal No.1581-1582 of 2005 will be binding on both the (3 of 3) [ITAP-3/2003] parties even for the years under consideration. If the decision is passed in favour of the assessee, it will be open for him to produce the same decision before the Assessing Officer and the same benefit will be granted to the assessee. In that view of the matter, all issues are answered in favour of the department and against the assessee.” 3. The issue will not survive. The reference is accordingly disposed of. Same benefit will be given to the parties of the present case. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. //Bmg 52 "