The Commissioner Of Income-Tax v. M/S Bombay Foods Pvt Ltd, 53-57 Laxmi

Ladda IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE No.233 of 1996. The Commissioner of Income-tax, ... Applicant. Versus M/s Bombay Foods Pvt Ltd, 53-57 Laxmi ... Respondent. Mr Suresh Kumar for the Applicant. CORAM : J.P. Devadhar & A.R. Joshi, JJ. DATE : 16 January, 2012. P.C. :- 1.At the instance of the Income tax Commissioner-I, Bombay, the ITAT has referred the following question of law for the opinion of this Court. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in vacating the order of the CIT passed under Section 263 of the Income-tax Act? 2.The Assessment year involved herein is AY-1985-86. 3.In the Assessment year in question the Assessing Officer has allowed the Ladda expenditure incurred by the assessee to cover payments made by way of commission and brokerage charges respectively without applying the provisions of Section 37 (3A) of the Income-tax Act. The CIT was of the opinion that the Assessing Officer was not justified in allowing the expenditure without taking into consideration the provisions of the explanation to Section 73 of the Act and accordingly passed an order by invoking jurisdiction under Section 263 of the Act. 4. On appeal filed by the Assessee, the ITAT relying upon the decisions of the Calcutta High Court in three cases reported in 192 ITR 619, 194 ITR 669 and 198 ITR 582, held that the Assessee was not a trader in shares and, therefore, the explanation to Section 73 would have no role to play. Accordingly, the ITAT has held that since the explanation to Section 73 has no relevance to the facts of the present case, no fault can be found with the decision of the Assessing Officer in allowing the claim of the Assessee. 5. It is relevant to note that the Revenue has not challenged the decision of ITAT in holding that the Explanation to Section 73 has no relevance to the facts of the present case. As a result, the decision of the ITAT to the extent that the Explanation to Section 73 has no application has attained finality. If the Explanation to section 73 has no application to the facts of the present case, then obviously the basis on which the jurisdiction under Section 263 of the Act was invoked would be gone and consequently, the Tribunal would be justified in setting aside the decision of the CIT under section 263 of the Act. In this view of the matter, we dispose of the reference by answering the question Ladda referred to us in the affirmative i.e.in favour of the assessee and against the revenue. Reference is disposed of accordingly, with no order as to costs. (A.R.Joshi,J) (J.P.Devadhar,J.)