Gujarat High Court
Commissioner Of Income Tax-Ii vs Turbo Bearing Pvt Ltd - Opponent(S) on 4 April, 2011
Author: Akil Kureshi
Bench: Akil Kureshi
TAXAP/2496/2009 1/3 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 2496 of 2009
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COMMISSIONER OF INCOME TAX-II - Appellant(s)
Versus
TURBO BEARING PVT LTD - Opponent(s)
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Appearance :
MRS MAUNA M BHATT for Appellant(s) : 1,
None for Opponent(s) : 1,
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CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 04/04/2011
ORAL ORDER
(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) Revenue is in appeal against judgement of the tribunal dated 30.6.2009 raising following questions of law for our consideration :
"(1) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) in deleting the disallowance made on account of job work income of Rs.2,50,154/ and profit in trading export of Rs.67,897/ while calculating the deduction claimed u/s.80HHC?
(2) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) in deleting the disallowance made on account of DEPB income of Rs.44,48,789/ while calculating the deduction u/s.80HHC & 80IA?
(3) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) in deleting the HC-NIC Page 1 of 3 Created On Tue Jul 12 00:06:04 IST 2016 TAXAP/2496/2009 2/3 ORDER disallowance made on account of fitness coupon of Rs.22,87,742/ made u/s.41?
(4) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) in deleting the addition made on account of interest capitalized of Rs.1,51,849/?"
With respect to question no.3, we find that CIT(Appeals) as well as tribunal both reversed the findings of the Assessing Officer and allowed the expenditure of Rs.22,87,742/ incurred by the assessee for replacement of ball bearing found to be defective. It was found that this was a consistent method followed by the assessee of making provision and deducting payments therefrom. It was observed that as per the accepted principles of commercial practice and accountancy, the liability accrued though in future, deduction is allowable. When CIT(Appeals) as well as tribunal both concurrently found that such liability has accrued, decision of allowing deduction thereof requires no interference.
With respect to question no.4, we find that CIT(Appeals) as well as tribunal both concurrently found that assessee had sufficient cash credit facility and such limit was not fully utilized. There was no direct nexus between funds lying in cash account and the payment made for capital acquisition. On such factual conclusion, issue was held in favour of the assessee. In view of the same, we don to find any question of law arising with respect to this issue also.
With respect to question no.1, counsel for the Revenue pointed out that same is covered in favour of Revenue by judgement of Supreme Court in case of Commissioner of Incometax v. K. Ravindranathan Nair reported in (2007) 295 ITR 228(SC).
With respect to question no.2, it is pointed out that similar HC-NIC Page 2 of 3 Created On Tue Jul 12 00:06:04 IST 2016 TAXAP/2496/2009 3/3 ORDER question is admitted and is being considered by this Court in Tax Appeal No.230/2008.
Under the circumstances, Tax Appeal is admitted only for consideration of question no.1 and 2 noted above.
To be heard with Tax Appeal No.230/2008.
(Akil Kureshi,J.) (Ms. Sonia Gokani,J.) (raghu) HC-NIC Page 3 of 3 Created On Tue Jul 12 00:06:04 IST 2016