ELSCOPE (P) LTD. Vs. COMMISSIONER OF INCOME TAX
LAWS(GJH)-2008-1-223
HIGH COURT OF GUJARAT
Decided on January 23,2008

Elscope (P) Ltd. Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

D.A.MEHTA, J. - (1.) THIS reference in fact encompasses two cross references: one by the assessee (R.A. No. 381/Ahd/1993), and another by the Revenue (R.A. Nos. 413 and 414/Ahd/1993).
(2.) THE question, at the instance of the assessee, has been referred by Tribunal, Ahmedabad Bench 'B' under Section 256(1) of the IT Act, 1961 (the Act): Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the disallowance of guarantee commission of Rs. 3,16,668 The said reference is for asst. yr. 1978 -79, the relevant accounting period being year ended on 30th June, 1977. In Revenue's reference the Tribunal has referred the following two questions, which are identical in nature, except for the amounts involved for the two assessment years, namely, asst. yrs. 1978 -79 and 1979 -80: For asst. yr. 1978 79: Whether, the Tribunal is right in law and on facts in deleting the addition of Rs. 32,50,557 assessed by the ITO as the assessee's income observing that the assessee had acquired going concern and had transferred the same within a period of 4 months and the profit arising on the reduction of liabilities was thus trading profit which is liable to be taxed as business income?For asst. yr. 1979 -80:Whether, the Tribunal is right in law and on facts in deleting the addition of Rs. 24,59,188 assessed by the ITO as the assessee's income observing that the assessee had acquired going concern and had transferred the same within a period of 4 months and the profit arising on the reduction of liabilities was thus trading profit which is liable to be taxed as business income?
(3.) HEARD Mr. B.D. Karia, learned advocate for the assessee and Mr. M.R. Bhatt, learned senior standing counsel for the Revenue. In relation to the question referred at the instance of the assessee it is an accepted position between the parties that the same is concluded by decision of the apex Court in the case of Addl. CIT v. Akkamamba Textiles Ltd. : [1997]227ITR464(SC) . In the circumstances, it is not necessary to set out the facts and contentions in detail. In light of the ratio laid down by the apex Court decision in the aforesaid case, the question referred at the instance of the assessee is answered in the negative i.e. in favour of the assessee and against the Revenue. The Tribunal was not justified in confirming the disallowance of guarantee commission of Rs. 3,16,668.;


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