O/TAXAP/1827/2005 JUDGMENT IN 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 judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to civil judge? JOINT COMMISSIONER OF INCOME TAX .Appellant(s) Versus RASHBIHARI ENTERPRISES LIMITED Opponent(s) Appearance: MR SUDHIR M MEHTA, ADVOCATE for Appellant(s) No. 1 Page 1 of 7 O/TAXAP/1827/2005 JUDGMENT MRS SWATI SOPARKAR, ADVOCATE for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 23/12/2014 COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. facts of these appeals and 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, appellant-revenue has challenged judgment and order of Income Tax Appellate Tribunal, Ahmedabd [for short Tribunal ] in ITA No.2278/Ahd/1999, whereby appeal filed by revenue was dismissed by Tribunal. 3. In Tax Appeal No.1738 of 2005, appellant-revenue has challenged judgment and order dated 09.05.2005, passed by Tribunal in ITA No.1442/Ahd/2001, whereby appeal filed by revenue was dismissed by Tribunal. 4. facts of these appeals are Page 2 of 7 O/TAXAP/1827/2005 JUDGMENT identical, therefore, we discuss facts of Tax appeal No.1827 of 2005 for our convenience. 5. facts, in brief, are that assessee had filed its return on 29th November, 1996 for assessment Year 1996-97 and declared total loss of Rs.56,50,705/-. After scrutiny, Assessing Officer passed assessment order under Section 143(3) of Income Tax Act and determined total income of assessee at Rs.33,74,188/- by making addition of Rs. 1,32,13,446/-. Against order of Assessing Officer, assessee filed appeal before Commissioner of Income Tax (Appeals). 5.1. CIT(A) vide order dated 29.09.1999 partly allowed appeal of assessee and allowed deduction of said amount i.e. Rs.1,32,13,446/-. Being aggrieved and dissatisfied with order of CIT(a), revenue filed appeal before Tribunal. Tribunal dismissed appeal of revenue. Hence, these appeals are filed at instance of revenue. 6. While admitting these appeals on 02.02.2007, Court had formulated following substantial question of law:- Whether on facts and in circumstances of case, and in law, Income-tax Appellate Tribunal is right in confirming order of Commissioner of Income-tax (Appeals) Page 3 of 7 O/TAXAP/1827/2005 JUDGMENT directing Assessing Officer to allow deduction of liability even though neither provision for same nor payment of same has been made by assessee during year under consideration and though provision was made and payment thereof was made in assessment year 2000- 2001 ? 7. Learned advocate for appellant-revenue has submitted that Tribunal has committed error in dismissing appeal of revenue. He further submitted that while passing impugned judgment and order, Tribunal has not properly appreciated material on record. Therefore, he urged that present appeals deserve to be allowed. 8. On other hand, Mr. Soparkar, leaned senior advocate for respondents-assessees has submitted that question of law raised in this appeal is already been concluded by Apex Court in favour of assessee and against revenue in 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 parties and perused material on record. We have also perused decision of Apex Court relied upon by learned advocate for respondents-assessees and find that question of law raised in this appeal is already concluded in favour of assessee and against revenue. Relevant paragraph of aforesaid Page 4 of 7 O/TAXAP/1827/2005 JUDGMENT decision reads as under:- main contention of learned Solicitor-General is that assessee failed to debit liability in its books of accounts and, therefore, it was debarred from claiming same as deduction either under section 10(1) or under section 10(2)(xv) of Act. We are wholly unable to appreciate suggestion that if assessee under some misapprehension or mistake fails to make entry in books of account and although, under law, deduction must be allowed by Income-tax Officer, assessee will lose right of claiming or will be debarred from being allowed that deduction. Whether assessee is entitled to particular deduction or not will depend on provision of law relating thereto and not on view which assessee might take of his rights nor can existence or absence of entries in books of account be decisive or conclusive in matter. assessee who was maintaining account on mercantile system was fully justified in claiming deduction of sum of Page 5 of 7 O/TAXAP/1827/2005 JUDGMENT Rs.1,49,776/- being amount of sales tax which it was liable under law to pay during relevant accounting year. It may be added that liability remained intact even after assessee had taken appeals to higher authorities or courts which failed. appeal is consequeutnly allowed and judgment of High Court is set aside. question which was referred is answered in favour of assessee and against revenue. assessee will be entitled to costs in this court and in High Court. 10. Since issue is already concluded, no elaborate reasons is required to be assigned by us for disposing this appeal. In that view of matter, we are of considered opinion that present appeal deserves to be dismissed and same is accordingly dismissed. question of law raised in this appeal is answered in favour of assessee and against revenue. Accordingly, we hold that Tribunal was right in confirming order of Commissioner of Income-tax (Appeals) and in directing Assessing Officer to allow deduction of liability. Page 6 of 7 O/TAXAP/1827/2005 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J) pawan Page 7 of 7 Joint Commissioner of Income-tax v. Rashbihari Enterprises Limited