O/Taxap/1827/2005 Judgment v. Commissioner Of Income-Tax (Central), Calcutta, Reported In [1971

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1827 of 2005 With TAX APPEAL NO. 1738 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?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 ?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 ? ================================================================ JOINT COMMISSIONER OF INCOME TAX....Appellant(s)VersusVersus RASHBIHARI ENTERPRISES LIMITED....Opponent(s) ================================================================ Appearance:MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 23/12/2014COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.The facts of these appeals and the question of law involved in these appeals are identical, therefore, both these appeals are being disposed of by this common judgment. 2. In Tax Appeal 1827 of 2005, the appellant-revenue has challenged the judgment and order of the Income Tax Appellate Tribunal, Ahmedabd [for short “the Tribunal”] in ITA No.2278/Ahd/1999, whereby the appeal filed by the revenue was dismissed by the Tribunal. 3.In Tax Appeal No.1738 of 2005, the appellant-revenue has challenged the judgment and order dated 09.05.2005, passed by the Tribunal in ITA No.1442/Ahd/2001, whereby the appeal filed by the revenue was dismissed by the Tribunal. 4. The facts of these appeals are identical, therefore, we discuss the facts of Tax appeal No.1827 of 2005 for our convenience. 5.The facts, in brief, are that the assessee had filed its return on 29th November, 1996 for the assessment Year 1996-97 and declared total loss of Rs.56,50,705/-. After scrutiny, the Assessing Officer passed the assessment order under Section 143(3) of the Income Tax Act and determined total income of the assessee at Rs.33,74,188/- by making addition of Rs. 1,32,13,446/-. Against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). 5.1.The CIT(A) vide order dated 29.09.1999 partly allowed the appeal of the assessee and allowed deduction of the said amount i.e. Rs.1,32,13,446/-.Beingaggrievedand dissatisfied with the order of the CIT(a), the revenue filed an appeal before the Tribunal. The Tribunal dismissed the appeal of the revenue. Hence, these appeals are filed at the instance of the revenue. 6.While admitting these appeals on 02.02.2007, the Court had formulated the following substantial question of law:- “Whether on the facts and in the circumstances of the case, and in law, the Income-tax Appellate Tribunal is right in confirming the order of the Commissioner of Income-tax (Appeals) directing the Assessing Officer to allow the deduction of the liability even though neither the provision for the same nor the payment of the same has been made by the assessee during the year under consideration and though the provision was made and payment thereof was made in the assessment year 2000-2001 ?” 6.While admitting these appeals on 02.02.2007, the Court had formulated the following substantial question of law:- “Whether on the facts and in the circumstances of the case, and in law, the Income-tax Appellate Tribunal is right in confirming the order of the Commissioner of Income-tax (Appeals) directing the Assessing Officer to allow the deduction of the liability even though neither the provision for the same nor the payment of the same has been made by the assessee during the year under consideration and though the provision was made and payment thereof was made in the assessment year 2000-2001 ?” 7.Learned advocate for the appellant-revenue has submitted that the Tribunal has committed an error in dismissing the appeal of the revenue. He further submitted that while passing the impugned judgment and order, the Tribunal has not properly appreciated the material on record. Therefore, he urged that the present appeals deserve to be allowed. 8.On the other hand, Mr. Soparkar, leaned senior advocate for the respondents-assessees has submitted that the question of law raised in this appeal is already been concluded by the Apex Court in favour of the assessee and against the revenue in the case of Kendarnath Jute Mfg. Co. Ltd. v. Commissioner of Income-Tax (Central), Calcutta, reported in [1971] 82 ITR paged 363. 9.We have heard learned advocate for both the parties and perused the material on record. We have also perused the decision of the Apex Court relied upon by the learned advocate for the respondents-assessees and find that the question of law raised in this appeal is already concluded in favour of the assessee and against the revenue. Relevant paragraph of the aforesaid decision reads as under:- “ The main contention of the learned Solicitor-General is that the assessee failed to debit the liability in its books of accounts and, therefore, it was debarred from claiming the same as deduction either under section 10(1) or under section 10(2)(xv) of the Act. We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, a deduction must be allowed by the Income-tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. The assessee who was maintaining account on the mercantile system was fully justified in claiming deduction of the sum of O/TAXAP/1827/2005 JUDGMENT Rs.1,49,776/- being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. It may be added that the liability remained intact even after the assessee had taken appeals to higher authorities or courts which failed. The appeal is consequeutnly allowed and the judgment of the High Court is set aside. The question which was referred is answered in favour of the assessee and against the revenue. The assessee will be entitled to costs in this court and in the High Court.” who was maintaining account on the mercantile system was fully justified in claiming deduction of the sum of O/TAXAP/1827/2005 JUDGMENT Rs.1,49,776/- being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. It may be added that the liability remained intact even after the assessee had taken appeals to higher authorities or courts which failed. The appeal is consequeutnly allowed and the judgment of the High Court is set aside. The question which was referred is answered in favour of the assessee and against the revenue. The assessee will be entitled to costs in this court and in the High Court.” 10.Since the issue is already concluded, no elaborate reasons is required to be assigned by us for disposing this appeal. In that view of the matter, we are of the considered opinion that the present appeal deserves to be dismissed and the same is accordingly dismissed. The question of law raised in this appeal is answered in favour of the assessee and against the revenue. Accordingly, we hold that the Tribunal was right in confirming the order of the Commissioner of Income-tax (Appeals) and in directing the Assessing Officer to allow the deduction of the liability. pawan O/TAXAP/1827/2005 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J)