PT. COMMISSIONER OF INCOME TAX JALANDHAR-I JALANDHAR vs. M/S MAX INDIA LTD NAWANSHAHR

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ITA/91/2016HC Punjab & HaryanaPHHC01110688201602 February 2017Author: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the assessee's counsel submitted that the quantum appeal for the assessment year 2003-04 had been dismissed on September 6, 2016. In light of this dismissal, the Court held that the second substantial question of law would not arise. Consequently, the Court concluded that the present appeal, which concerned the penalty, had to be dismissed. The reasoning was that if the underlying quantum of income was not sustained, then the penalty levied on that quantum would also not be sustainable. The operative direction was the dismissal of the appeal. No issue was expressly left undecided.

What were the facts?

The Principal Commissioner of Income Tax, Jalandhar-I (the Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated October 27, 2015, passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The appeal pertains to assessment year 2003-04 and concerns the deletion of a penalty levied under Section 271(1)(c) of the Act. The penalty was imposed for furnishing inaccurate particulars of income by making a wrong claim for inadmissible legal and professional expenses. The assessee is M/s Max India Ltd.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was right in law in upholding the order of the CIT(A) deleting the penalty levied under Section 271(1)(c) for furnishing inaccurate particulars of income by making a wrong claim of inadmissible legal and professional expenses. 2. Whether the ITAT erred in law in not appreciating that the assessee failed to discharge its onus to prove that the payment made to its foreign subsidiary, Max UK, on account of legal and professional expenses was in relation to services rendered wholly and exclusively for business purposes, as required under Section 37. The Revenue argued that the assessee failed to discharge its onus under Section 37. The Assessee contended that since the quantum appeal (ITA No.188 of 2013 for AY 2003-04) was dismissed on September 6, 2016, the second question of law would not arise and that the second question should be decided against the Revenue in light of the quantum appeal being decided in favour of the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271(1)(c),Section 37

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Decided on : 02.02.2017 Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar. . . . Appellant Versus M/s Max India Ltd. . . . Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE RAMENDRA JAIN PRESENT: Mr. Vivek Sethi, Advocate for the appellant. Mr. Gaurav Jain, Advocate for the respondent. **** AJAY KUMAR MITTAL, J. (Oral) The revenue by way of present appeal filed under Section 260A of the Income Tax Act, 1961 (in short 'the Act'), assailed the order dated 27th October, 2015, passed passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as 'the Tribunal'), in ITA No.760(ASR)/2013, for the assessment year 2003-04, claiming the following substantial questions of law:- “(i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is right in law in upholding the order of the Ld. CIT(A) deleting the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 for furnishing of inaccurate particulars of its income by making wrong claim of inadmissible legal and professional expenses. (ii) Whether the Hon'ble ITAT has erred in law in not appreciating that the assessee failed to discharge its Jawala Ram 2017.02.07 12:30 I attest to the accuracy and authenticity of this document Chandigarh - 2 - onus to prove that the payment made to its foreign subsidiary Max UK on account of legal and professional expenses was in relation to the services actually rendered wholly and exclusively for the business purposes, as required under the provisions of section 37 of the Income Tax Act, 1961 ?”

2.

At the outset, learned counsel for the respondent-assessee submitted that the quantum appeal i.e. ITA No.188 of 2013, for the Assessment Year 2003-04 was dismissed on 06th September, 2016. In view thereof, it was submitted that so far as question No.(ii) is concerned, the same would not arise. It was further pointed out that since the quantum appeal has been decided in favour of the assessee, equally, question No.(ii) has to be decided against the revenue.

3.

In view of the above, the present appeal stands dismissed. (AJAY KUMAR MITTAL) JUDGE (RAMENDRA JAIN) February 02, 2017 JUDGE J.Ram

Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No Jawala Ram 2017.02.07 12:30 I attest to the accuracy and authenticity of this document Chandigarh

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