Cit Vs. Ashok Pal Daga

Cit vs Ashok Pal Daga

Type Court Judgment Court Madhya Pradesh Decided Sep 22, 2004

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Citation: sooperkanoon.com/511558
Court: Madhya Pradesh High Court
Decided On: Sep 22, 2004
Case Number: Misc. Civil Case No. 532 of 1995 22 September 2004
Subject: Direct Taxation

Case Summary

AI-generated summary - not the official court judgment text.

Counsels: R.L. Jain, for the Applicant G.M. Chafekar & Sarda, for the Respondent. Head Note: INCOME TAX Reference--QUESTION OF FACTBusiness deduction under section 36(1)(iii)Held: On finding that assessee in order to carry in his commission business of Life Insurance borrowed loan and repaid it, the Tribunal allow...

Key legal issue: Direct Taxation

Parties & Advocates

Appellant / Petitioner

Cit

Advocate R.L. Jain, <i>for the Applicant</i> G.M. Chafekar & Sarda, <i>for the Respondent</i>.

Respondent

Ashok Pal Daga

Legal References

Reported In: [2005]142TAXMAN27(MP)

Excerpt

.....on interest on said loan as it had nexus between borrowing on which interest expense was incurred and that income was earned by way of commission and not from arranging hawala or bogus entries of credit for a third party. once it was found as a fact that claims of assessee was a bona fide and genuine one it became a finding of fact. such finding had to be given effect to for claiming deduction out of total income and that did not involve any interpretation of section and/or circular under the act. the same amounted to finding of fact. income tax act, 1961 s.256(2) income tax act, 1961 s.36(1)(iii) high court of madhya pradesh, indore bench a.m. sapre & ashok kumar tiwari, jj. - section 2(f): [dipak misra, k.k. lahoti & rajendra menon, jj] service tax - packaging and bottling of liquor whether amounts to manufacture within meaning of section 2(f) of central excise act 1944? finance act 932 of 1994), section 65 (76 b) (as amended on 16.6.2005) - held, the first limb of the inclusive definition of the manufacture under section 2(f) of central excise act has a very wide connotation. as the definition clause lays down an inclusive facet, the term manufacture has to be construed in a natural and plain manner and would include any process incidental or ancillary to the completion of a manufactured product. keeping in view the context in which the term manufacture has been used, it would take in its fold incidental and ancillary process in the manufacture or finishing of any manufactured product. it does not leave any room for doubt that an allied process should be integral and inextricable part of manufacture of completeness and presentability of the manufactured product. section 65(76b) of finance act used the words but it does not include. thus it is a definition which has the inclusive as well as exclusive facet. by virtue of the same it may include certain things and exclude others. it is well settled principle of law that a definition is not to be read in..........years 1987-88 to 1989-90 in relation to same assessee, i.e., respondent herein. according to tribunal (itat) the questions proposed by the revenue do not really arise out of the order passed by tribunal in appeal referred supra and they are in fact questions relating to facts. it is for this reason and after recording a finding to this effect, the tribunal declined to allow the allocation made by the revenue under section 256(1) ibid., and thus refused to refer the statement of case to this court for answering the question proposed. as a consequence of this rejection, the revenue has come up under section 256(2) of the act to this court praying for calling the reference from the tribunal on the question proposed by the revenue. notice of this application was issued to respondent/assessee. they are served and represented.3. heard shri r.l. jain, learned counsel for the applicant and shri g.m. chafekar, learned senior counsel with shri sarda, learned counsel for non-applicant.4. having heard learned counsel for the parties and having perused record of the case, we are of the view that tribunal was right in holding that the questions proposed by the revenue are essentially based on facts and hence, they are not referable questions of law for being answered by this court. in other words, we too have formed the same opinion namely that the question proposed are questions of fact and no that of law a sine qua non for making a reference under section 256(1) ibid as a consequence, the application is liable to be dismissed.5. following two questions are proposed by revenue for being answered by this court in exercise of powers conferred under section 256(1) ibid :'1. whether on the f acts and in the circumstances of the case, the honble tribunal is justified in law in holding that there was nexus between the borrowings on which interest expenses was incurred and income earned by the assessee by way of commission from the business of procuring policies of life.....

Full Judgment

ORDER

A.M. Sapre, J.

The decision rendered in this case shall also govern disposal of other case being M.C.C. No. 511 of 1995 because both these cases arise out of the same order and secondly they arise between the same parties except the difference is that of different assessment years.

2. This is an application made by the revenue (Commissioner of Income Tax) under section 256(2) of the Income Tax Act consequent upon the dismissal of their application made under section 256(1) ibid. by the Tribunal being R.A. Nos. 94, 97 and 98/Ind/94 on 12-12-1994 which in turn arise out of an order dated 8-7-1994 passed by Tribunal in consolidated cases being ITA Nos. 288, 289, 781, 557 and 558/Ind/92 arising out of assessment years 1987-88 to 1989-90 in relation to same assessee, i.e., respondent herein. According to Tribunal (ITAT) the questions proposed by the revenue do not really arise out of the order passed by Tribunal in appeal referred supra and they are in fact questions relating to facts. It is for this reason and after recording a finding to this effect, the Tribunal declined to allow the allocation made by the revenue under section 256(1) ibid., and thus refused to refer the statement of case to this court for answering the question proposed. As a consequence of this rejection, the revenue has come up under section 256(2) of the Act to this court praying for calling the reference from the Tribunal on the question proposed by the revenue. Notice of this application was issued to respondent/assessee. They are served and represented.

3. Heard Shri R.L. Jain, learned counsel for the applicant and Shri G.M. Chafekar, learned senior counsel with Shri Sarda, learned counsel for non-applicant.

4. Having heard learned counsel for the parties and having perused record of the case, we are of the view that Tribunal was right in holding that the questions proposed by the revenue are essentially based on facts and hence, they are not referable questions of law for being answered by this court. In other words, we too have formed the same opinion namely that the question proposed are questions of fact and no that of law a sine qua non for making a reference under section 256(1) ibid As a consequence, the application is liable to be dismissed.

5. Following two questions are proposed by revenue for being answered by this court in exercise of powers conferred under section 256(1) ibid :

'1. Whether on the f acts and in the circumstances of the case, the Honble Tribunal is justified in Law in holding that there was nexus between the borrowings on which interest expenses was incurred and income earned by the assessee by way of commission from the business of procuring policies of Life Insurance ?

2. Whether on the facts and in the circumstances of the case, the Honble Tribunal is justified in Law, in holding that the assessee did not earn income from arranging Hawala or bogus entries of credit for a third party ?'

6. While deciding the aforesaid two questions on merits in appeal, the tribunal as a fact recorded a finding that assessee in order to carry on his commission business of IDC borrowed loan and repaid it. Once, it is found as a fact that claims of the assessee was a bona fide and genuine one; it becomes a finding of fact. Such finding has to be then given effect to for claiming deduction out of the total income. This then does not involve any interpretation of section and/or circular under the Act.

7. It is for this reason : we do not find any issue of law as such which can be answered by this court on merits. It being a settled principle of law relating to exercise of jurisdiction under section 256(1) as also under section 256(2) the question proposed must be a question of law. It is only then the same can be referred for drawing statement of case. Such does not appear to be a case of that nature.

8. In view of aforesaid discussion, the application made by revenue under section 256(2) of the Act for calling the reference from the Tribunal is found to be devoid of any merit. The application fails and is hereby dismissed.

No costs.

Same Court & Year Madhya Pradesh · 2004 Same Parties Cit vs Ashok Pal Daga Same Subject Direct Taxation

Direct Taxation