CIT Vs. ANNAPOORNA GOWRISHANKAR HOTELS P LTD

JUDGEMENT

(1.) THE Tribunal has stated a case and referred the following question of law at the instance of the Revenue:

(2.) THE assessment year involved is 1986-87. THE assessee is a private limited company carrying on the business of running a chain of hotels in Coimbatore and the Income Tax Officer in the original assessment made on the assessee for the assessment year 1986-87, treated the company as a non-trading company and levied the tax at the rate of 55%. THEreafter, he resorted to rectification proceedings under Section 154 of the Income Tax Act and treated the company as a trading company and levied the tax at the rate of 60%. THE assessee challenged the order of rectification by filing an appeal before the Commissioner of Income Tax (Appeals) and the Commissioner of Income Tax (Appeals) upheld the order of the assessing officer in the light of the decision of this Court in the case of C.I.T. Vs. BUHARI SONS (P) Ltd. (144 I.T.R, 12). Aggrieved by the order, the assessee carried the matter in appeal by filing appeal before the Income Tax Appellate Tribunal, Madras. THE Tribunal, following its earlier order rendered in the assessee's own case, held that as per section 2(7)(g) of the Finance Act, 1986, the assessee is not a trading company and is liable to be taxed at the rate of 55% and not at 60% as levied by the Income-tax Officer in the order of rectification. THE Tribunal thereby allowed the appeal preferred by the assessee and the order of the Tribunal is the subject matter of reference.

(3.) ACCORDINGLY, we hold that the view taken by the Tribunal is justifiable in law and there are no grounds or infirmities in the order warranting our interference. ACCORDINGLY, the question of law referred to us is answered in the affirmative, in favour of the assessee and against the Revenue. Counsel for the assessee is entitled to costs of Rs.500/-.