Case ID |
6a7c0471-6f68-4ff0-b426-73531f9f4a32 |
Body |
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Case Number |
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Decision Date |
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Hearing Date |
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Decision |
The case revolves around the interpretation of Section 80J of the Income-tax Act, 1961, regarding the inclusion of borrowed capital in the calculation of capital employed for tax deductions. The Income-tax Appellate Tribunal initially ruled that borrowed money could be included, but this decision was contested. The Allahabad High Court, referencing the Supreme Court's ruling in Lohia Machines Ltd. v. Union of India, concluded that borrowed capital should indeed be excluded from the capital employed. Consequently, the Tribunal's order was set aside, favoring the revenue and reinforcing the exclusion of borrowed funds in determining capital for tax purposes. |
Summary |
In this pivotal case, the Allahabad High Court addressed the complex issue of capital employed in the context of tax deductions under Section 80J of the Income-tax Act, 1961. The court examined whether borrowed capital could be included in this calculation, a matter of significant consequence for businesses seeking tax benefits. The Tribunal's initial stance favored the inclusion of borrowed funds, but upon review, the High Court aligned with the Supreme Court's established precedent in Lohia Machines Ltd. v. Union of India. This decision underscores the importance of correctly interpreting tax laws to ensure compliance and proper financial reporting. The ruling has implications for various industries, particularly those reliant on borrowed capital for operational funding. It serves as a key reference for future cases concerning capital employed and tax deductions, emphasizing the need for clarity in tax legislation. |
Court |
Allahabad High Court
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Entities Involved |
Not available
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Judges |
K.C. AGRAWAL, ACTG. C.J.,
R.K. GULATI, J.
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Lawyers |
Not available
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Petitioners |
Commissioner of Income Tax
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Respondents |
Khattar Cold Storage
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Citations |
1990 SLD 1629,
(1990) 181 ITR 229
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Other Citations |
Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308 (SC),
Kota Box Mfg. Co. v. ITO [1980] 123 TIR 638 (All.)
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Laws Involved |
Income-tax Act, 1961
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Sections |
80J
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