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Commissioner of Income-tax Vs. Ethelbari Tea Co. (1931) Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation;Sales Tax
CourtKolkata High Court
Decided On
Case NumberI.T.A. No. 130 of 2000
Judge
Reported in[2002]256ITR470(Cal),[2003]129STC256(Cal)
ActsIncome Tax Act, 1961 - Section 35CCA
AppellantCommissioner of Income-tax
RespondentEthelbari Tea Co. (1931) Ltd.
Appellant AdvocateAgarwal, Adv.
Respondent AdvocateDutta, Adv.
DispositionPetition allowed
Cases ReferredState of Maharashtra v. Suresh Trading Company
Excerpt:
- .....are unable to apply the principles laid down by the aforesaid division bench of this court. in the aforesaid decision of the supreme court, it was held that a purchasing dealer was entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. the supreme court further held that whatever might be the effect of a retrospective cancellation upon the selling dealer, it could have no effect upon any person who had acted upon the strength of a registration certificate when the registration was current. the supreme court in that decision also observed that it was not the duty of persons dealing with registered dealers to find out whether a state of facts existed which would justify the cancellation of their registration. in this case, we are of the view.....
Judgment:

1. This rule has been obtained by the Revenue Department by raising the following question :

'Whether, on the facts and circumstances of the case, the learned Tribunal was justified in law in holding that the assessee's claim under Section 35CCA of the Income-tax Act, 1961 is allowable even though the approval of the society had been withdrawn with retrospective effect ?'

2. We have heard Mr. Agarwal, learned counsel appearing on behalf of the department and Mr. Dutta, learned counsel appearing for the assessee. In this case, only question that is raised is whether the assessee would be entitled under Section 35CCA of the Income-tax Act, 1961, deduction of income-tax even though the approval of the society had been withdrawn with retrospective effect. In support of this contention, Mr. Agarwal relies on a division Bench decision of this Court in the case of Commissioner of Income-tax v. Bankam Investment Limited : [1994]208ITR208(Cal) . It is true that in that case, it was held that when the State Level Committee had withdrawn the approval of the society with retrospective effect from December 13, 1982, the petitioner was not entitled to any deduction under Section 35CCA of the Income-tax Act, 1961. In view of a decision of the Supreme Court in the case of State of Maharashtra v. Suresh Trading Company [1998] 109 STC 439, we are unable to apply the principles laid down by the aforesaid division Bench of this Court. In the aforesaid decision of the Supreme Court, it was held that a purchasing dealer was entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. The Supreme Court further held that whatever might be the effect of a retrospective cancellation upon the selling dealer, it could have no effect upon any person who had acted upon the strength of a registration certificate when the registration was current. The Supreme Court in that decision also observed that it was not the duty of persons dealing with registered dealers to find out whether a state of facts existed which would justify the cancellation of their registration. In this case, we are of the view that the aforesaid principle laid down by the Supreme Court in the aforesaid decision would be squarely applicable. Admittedly, on the date the payment was made, the society was very much in existence. It is also an admitted fact, subsequent to that the registration was withdrawn. In view of the aforesaid decision of the Supreme Court, we have no hesitation to hold that the writ petitioner was entitled to deduction as given by the Tribunal. Therefore, there is no merit in this Rule. Rule is accordingly discharged.

3. There will be no order as to costs.

All parties are to act on a xeroxed signed copy of this order on the usual undertaking.


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