The Commissioner Of Income Tax, City-Ii,Mumbai v. M/S Lenier Overseas Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE NO. 456 OF 1997 The Commissioner of Income Tax, City-II,Mumbai Vs. M/s Lenier Overseas Ltd. ..Applicant ..Respondent .... Mr. Suresh Kumar, Advocate for Applicant. .... P.C.: CORAM : M.S. SANKLECHA & G.S. KULKARNI, JJ.DATED : 21 AUGUST 2015 This reference under Section 256(1) of the Income TaxAct, 1962 for the Assessment Years 1981-82 to 1984-85 and 1986-87 raises the following question of law for our opinion: “Whether, on the facts and in the circumstances of thecase, the Tribunal was justified in holding that since inrespect of income from interest on long terms and shortterms loans to the Indian Company, the method ofaccounting followed by the assessee company was thecash system and no interest was received during theprevious years relevant to those assessment years theinterest income was not liable to assessment and could not be included in the total income of the assesseecompany?” 2.Mr. Suresh Kumar, the learned Counsel for the revenuestates that the tax effect in the present reference for A.Y. 1981-82 isRs.1,80,540/-, A.Y. 1982-83 is Rs.1,55,568/-, A.Y. 1983-84 isRs.1,39,056/-, A.Y. 1984-85 is Rs.1,45,819/- and A.Y. 1986-87 isRs.97,452 aggregating to Rs.7,18,435/-. 3.On 24 July 2015, we had in an order passed in IncomeTax Reference No. 430/1997 (Commissioner of Income Tax Vs. M/sComputer Point (I) Ltd.), while returning the reference unansweredmade the following observations: “Therefore, in view of the Instruction No.5dated 10 July 2014 read with decision of this Court inCommissioner of Income Tax Vs. Madhukar Inamdar(HUF) – 318 ITR 149; Commissioner of Income Tax Vs.Pithwa Engineering Works – 276 ITR 598 andCommissioner of Income Tax Vs. Vijaya Kawekar - 350ITR 237 (dealing with earlier Circulars/Instructions) theinstructions of 2014 issued by CBDT would also beapplicable to pending appeals and references. 5. In fact this Court in Madhukar Inamdar (HUF)has while dealing with Circular dated 15 May 2008observed as under: “8. This Court can very well take judicial noticeof the fact that by passage of time money value has gonedown, the cost of litigation expenses has gone up, filing ofcases at the instance of the Revenue has increased;consequently, the burden on the department has alsoincreased to a tremendous extent. The corridors ofsuperior courts are choked with huge pendency of cases.….. In this view the Board has rightly taken a decision notto file appeals, if the tax effect is less than Rs.4 lakhs so asto reduce the burden of the Department as well as of theTribunals and Courts. The same policy for old mattersneeds to be adopted by the department, so as to achievethe object of the policy laid down by the Central Board ofDirect Taxes.” 6. Nothing has been shown to us to indicate that the issueraised in this particular reference would fall within theexclusion clause of the 2014 Circular nor that the issue hasa cascading effect or would otherwise be covered by theApex Court decision in Commissioner of Income Tax Vs.Surya Herbal Ltd. - 350 ITR 300. In view of the above, wereturn the reference unanswered.” 4.The above observations are apposite to the present facts.Thus the present reference which has tax effect aggregating to Rs.7,18,435/- is being returned unanswered as having low tax effect. [G.S. KULKARNI, J][M.S. SANKLECHA, J.]