1991 (12) TMI 29 - HC - Income Tax

Summary

Issues involved: Assessment of weighted deduction under section 35B(1)(b) of the Income-tax Act, 1961 for insurance and port fees for the assessment year 1978-79.

Summary:
The High Court of Gujarat considered a case where a registered partnership firm claimed weighted deduction for insurance and port fees under section 35B(1)(b) of the Income-tax Act, 1961 for the assessment year 1978-79. The Commissioner of Income-tax challenged the assessment made by the Income-tax Officer, leading to an appeal before the Income-tax Appellate Tribunal.

The Tribunal ruled in favor of the assessee, stating that two views on the matter were possible, and therefore, the Commissioner could not invoke section 263 of the Act. The Revenue appealed this decision, leading to two questions being referred to the High Court for opinion.

Regarding the first question on the allowability of the claims under section 35B, the High Court cited a previous decision and ruled against the assessee. For the second question, the High Court disagreed with the Tribunal's view that the Commissioner could not invoke section 263 based on the debatable nature of the issue. The High Court clarified that the Commissioner can revise an order if deemed erroneous and prejudicial to the Revenue, even in cases of debate.

The High Court concluded by answering both questions against the assessee, emphasizing the Commissioner's authority to revise orders under section 263, even in debatable situations.