| Case ID |
d80c1664-fcd9-4dfe-b430-c78c30602737 |
| Body |
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| Case Number |
IT REFERENCE No. 210 OF 1974 |
| Decision Date |
Apr 05, 1976 |
| Hearing Date |
|
| Decision |
The Gujarat High Court ruled that the assessee-company was not entitled to deduct the entire amount of interest paid on the mortgage of buildings and machineries. The court found that the Income-tax Officer's apportionment of interest between the properties and the machineries was correct. The decision emphasized that under section 24(1)(iii) of the Income-tax Act, deductions could only be made for interest that was attributable to the mortgage of properties included in the total income. This ruling clarified that only the income from buildings and lands appurtenant thereto could be considered for deductions, thus reinforcing the necessity for apportionment in cases involving composite mortgages. |
| Summary |
In Gujarat Ginning & Mfg. Co. Ltd. v. Commissioner of Income Tax, the Gujarat High Court examined the eligibility of the assessee-company for deductions on interest paid for a mortgage that covered both buildings and machinery. The court determined that under the Income-tax Act, 1961, specifically section 24(1)(iii), only interest attributable to the mortgage of properties that contributed to the company's total income could be deducted. The ruling highlighted the importance of apportionment when dealing with composite mortgages, and the court upheld the Income-tax Officer's decision to allocate interest between the properties and the machineries. This case serves as a precedent for similar tax-related disputes, emphasizing the need for clarity on deductions associated with income from house property. |
| Court |
Gujarat High Court
|
| Entities Involved |
Not available
|
| Judges |
B.J. Divan, C.J.,
B.K. Mehta, J.
|
| Lawyers |
J.P. Shah for the Applicant,
K.H. Kaji,
R.P. Bhatt for the Respondent
|
| Petitioners |
Gujarat Ginning & Mfg. Co. Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1977 SLD 1049,
(1977) 107 ITR 590
|
| Other Citations |
CIT v. Bhopal Sugar Industries Ltd. [1970] 78 ITR 209 (MP),
CIT v. Indian Bank Ltd. [1965] 56 ITR 77 (SC),
CIT v. Industrial Investment Trust Co. Ltd. [1968] 67 ITR 436 (Bom.),
CIT v. Maharashtra Sugar Mills Ltd. [1968] 68 ITR 512 (Bom.),
CIT v. Radha Swami Bank [1972] 85 ITR 136 (All.),
CIT v. Sabarkantha Zilla Kharid Vechan Singh Ltd. [1977] 107 ITR 447 (Guj.),
CIT v. South Indian Bank Ltd. [1966] 59 ITR 763 (SC),
Hanuman Sugar & Industrial Ltd. v. CIT [1970] 76 ITR 603 (Cal.),
Hughes v. Bank of New Zealand [1938] 21 TC 472 (KB)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
24
|