COMM. OF INCOME TAX-II, JALANDHAR vs. M/S EVERGREEN PUBLICATIONS (INDIA) (P) LTD

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ITA/863/2010HC Punjab & HaryanaPHHC01093841201020 February 2020Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the issue of tax neutrality needed to be determined by the Assessing Officer. Consequently, the matters were remanded back to the Assessing Officer for this determination. The parties were given the liberty to take further proceedings as per law after the Assessing Officer's decision. The High Court did not decide on the core issue of the distinction between 'work's contract' and 'contract of supply' or the consequent tax liability. The ratio decidendi is that factual disputes regarding tax neutrality, which underpin the relevance of a legal issue, should be resolved at the assessment stage before the higher courts adjudicate on the merits of the legal question.

What were the facts?

The appeals before the High Court of Punjab and Haryana at Chandigarh involved common questions of law and fact. The primary issue concerned the distinction between a 'work's contract' and a 'contract of supply' and its implication on the assessee's liability to deduct tax at source. The assessee, M/s. Evergreen Publications (India)(P) Ltd., argued that the issue was academic and tax-neutral. The Revenue, represented by the Commissioner of Income Tax, disagreed with the tax-neutrality argument and sought to rely on the Supreme Court judgment in M/s. Hindustan Coca Cola Beverage (P) Ltd. vs Commissioner Of Income Tax. The High Court decided to remand the matters back to the Assessing Officer.

What were the issues?

1. Whether the distinction between a 'work's contract' and a 'contract of supply' has implications for the assessee's liability to deduct tax at source under Section 194C of the Income Tax Act, 1961? Assessee's contention: The assessee argued that the issue was academic because the case was tax-neutral. No specific provision was named for this argument, but it related to the tax implications of the contract classification. Revenue's contention: The Revenue disagreed with the assessee's assertion of tax neutrality. They argued that if the facts indicated a tax-neutral effect, the case should be covered by the Supreme Court's decision in M/s. Hindustan Coca Cola Beverage (P) Ltd. vs Commissioner Of Income Tax. This implicitly suggests the Revenue believed the distinction between contract types was material and could lead to tax implications.

Which sections of the Income-tax Act were involved?

Section 194C

AI-generated summary — verify with the full judgment below

CM-27439-CII-2010 in/and ITA-863-2010 (O&M) 1 CM-6193-CII-2011 in/and ITA-127-2011 (O&M) and ITA-249-2016 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 20.2.2020 CM-27439-CII-2010 in/and ITA-863-2010 (O&M) The Commissioner of Income Tax, Jalandha-II, Jalandhar .....Appellant Versus M/s. Evergreen Publications (India)(P) Ltd. ...... Respondent CM-6193-CII-2011 in/and ITA-127-2011 (O&M) M/s. Evergreen Publications (India)(P) Ltd. .....Appellant Versus Income Tax Appellate Tribunal, Amritsar Bench, Amritsar ...... Respondent ITA-249-2016 (O&M) The Pr. Commissioner of Income Tax-2, Jalandhar .....Appellant Versus M/s. Evergreen Publications (India) Ltd. ...... Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI : HON'BLE MR.JUSTICE AVNEESH JHINGAN *** Present : Mr. Vivek Sethi, Sr. Standing counsel with Mr. Varun Issar, Jr. Standing counsel for the Revenue. Mr. Pankaj Jain, Senior Advocate with Mr. Divya Suri, Advocate for the Assessee. ANURADHA 2020.03.04 16:47 I attest to the accuracy and integrity of this document

CM-27439-CII-2010 in/and ITA-863-2010 (O&M) 2 CM-6193-CII-2011 in/and ITA-127-2011 (O&M) and ITA-249-2016 (O&M) *** AJAY TEWARI, J. (Oral) CM-27439-CII-2010 in ITA-863-2010 This is an application for condonation of delay of 8 days delay in re-filing the appeal.

For the reasons recorded in the application, the same is allowed and delay of 8 days in re-filing the appeal is condoned. CM-6193-CII-2011 in ITA-127-2011 This is an application for condonation of delay of 115 days delay in re-filing the appeal.

For the reasons recorded in the application, the same is allowed and delay of 115 days in re-filing the appeal is condoned. Main cases

1.

Vide this common order we shall dispose of above said three appeals as the common question of law and facts are involved therein. For the sake of convenience, facts are being taken from ITA- 863-2010. 2. The main issue which arises for consideration in this appeal (both on behalf of the revenue as well as the assessee) relates to the difference in connotation between 'work's contract' and 'contract of supply' and consequently, whether the assessee was liable to deduct tax at source or not. Learned Senior counsel appearing on behalf of the assessee states that in fact this issue is academic because the case is tax neutral. Learned Senior standing counsel for the Revenue however states that he would not be in a position to agree with this factual argument and that in case the facts display tax neutral effect the present case be covered ANURADHA 2020.03.04 16:47 I attest to the accuracy and integrity of this document

CM-27439-CII-2010 in/and ITA-863-2010 (O&M) 3 CM-6193-CII-2011 in/and ITA-127-2011 (O&M) and ITA-249-2016 (O&M) by the decision of the Supreme Court judgment M/S. Hindustan Coca pooja sharma-1

Whether speaking/reasoned - Yes/No Whether reportable - Yes/No ANURADHA 2020.03.04 16:47 I attest to the accuracy and integrity of this document

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