1971 (3) TMI 48 - HC - Income Tax

Relief under sections 84 and 88 allowability in the hands of a firm - fact that the Income-tax Officer had granted these exemptions in other hands (allowed in the partners assessment) was no reason to deny the benefit to the firm

Summary

Issues:
- Interpretation of sections 84 and 88 of the Income-tax Act, 1961
- Entitlement of a registered firm to claim exemption and relief under sections 84 and 88
- Correctness of the order made by the Income-tax Appellate Tribunal
- Question of law regarding the right of the assessee to claim exemption and relief under sections 84 and 88

Analysis:

The judgment pertains to an application made by the Commissioner of Income-tax under section 256(2) of the Income-tax Act, 1961, concerning the entitlement of a registered firm, Messrs. Bharat Bhandar, to claim exemption and relief under sections 84 and 88 of the Act. In the assessment year 1963-64, the firm gave donations and derived income from a newly set up industry. The Income-tax Officer initially granted exemption under section 84 but apportioned it among individual partners, not allowing the rebate under section 88. The Appellate Assistant Commissioner upheld this decision, stating that sections 84 and 88 are not meant for granting exemption and relief twice over.

The firm then appealed to the Income-tax Appellate Tribunal, which allowed the appeal, holding that the firm was entitled to claim exemption under sections 84 and 88 as per the wordings of the Income-tax Act. Subsequently, the Commissioner of Income-tax moved an application under section 256(1) requesting the Tribunal to refer the question of the firm's right to claim exemption and relief under sections 84 and 88 to the High Court. The Tribunal rejected the application, emphasizing the clear and unambiguous language of the relevant sections.

The High Court analyzed sections 84 and 88, highlighting that the firm was entitled to the benefits provided therein as the industrial undertaking and donations in question fell within the scope of these sections. The Court dismissed the argument that relief would depend on whether the donations were made by the firm or individual partners, noting that such a submission was not raised before the revenue authorities. The Court concluded that no arguable question of law arose from the appellate order, rejecting the Commissioner's application and making no order as to costs.

In summary, the judgment clarifies the entitlement of a registered firm to claim exemption and relief under sections 84 and 88 of the Income-tax Act, emphasizing the clear provisions of the Act and dismissing the Commissioner's application questioning the Tribunal's decision.