Case Law Details
In this case the challenge before the Court was to an order dated 29.1.1970 passed by the Commissioner of Income Tax who had dismissed the petitioner’s Revision Application filed under Section 33A and Section 264(1) of the Act on the ground of limitation. The issue pertaied to the Assessment Year 1961-62, 1962-63, 1963-64, for which period the petitioner had incurred certain expenditure, however no deduction was claimed in respect of the same, relying upon the decision of this Court and other High Courts in respect of deductibility of such expenses. The Income Tax Officer had also not allowed this deduction during the course of respective assessment. The assessments were finalised subsequently in the year 1966. The Supreme Court had reversed the view taken by this Court and other High Courts in India and same was reported in the case “India Cements Ltd. Vs. Commissioner of Income Tax” and held that such expenditure must be treated as revenue expenditure and therefore, deduction thereof should be given from the gross income earned by the concerned assessee. The petitioner having received the knowledge of the decision of the Supreme Court, moved the Commissioner of Income Tax by a revision application on 26.4.1966. The Commissioner issued a notice to the petitioner recording as to why the application be not treated as time barred. The petitioner responded to the show cause notice stating that the view taken by the Bombay and other High Courts as regards the allowance of expenditure was upset by the Supreme Court in the case of “India Cements Ltd.” and has finally laid down principles of law in that regard. It was stated that in these circumstances the petitioner had moved the application for condonation of delay. The Commissioner, however, refused to accept the said reasons and condone the delay. It is in these circumstances the Division Bench of Gujarat High Court held that it was the decision of the Supreme Court which really gave a cause of action to the petitioner – assessee to move the Commissioner in revision and hence, the Commissioner was in error in holding that the change of legal position brought about by “India Cements Ltd.” was hardly a valid ground for condoning the delay. It was observed that the decision of the Supreme Court amounted to declaration of law as contemplated under Article 141 of the Constitution of India and that same had retrospective effect. It was held that it was only after the decision of the Supreme Court the petitioner had reason to move the Commissioner in revision with a view to obtain refund. This was accepted to be a sufficient cause.
Gujarat High Court
Karamchand Premchand Pvt. Ltd.
vs
Commissioner of Income-Tax
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