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

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ITA/111/2016HC Punjab & HaryanaPHHC01110293201602 February 2017Author: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the revenue. The primary reason for dismissal was the submission by the assessee's counsel that the quantum appeal for the same assessment year (ITA No.186 of 2013) had already been dismissed on September 6, 2016. In light of this prior dismissal of the quantum appeal, the High Court held that the second substantial question of law (regarding the onus to prove business expenditure) would not arise. Consequently, the court concluded that since the quantum appeal was decided in favour of the assessee, the second question would necessarily be decided against the revenue. The appeal was dismissed in view of these submissions, without delving into the merits of the penalty deletion itself.

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, against an order dated October 27, 2015, passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The appeal pertained to assessment year 2002-03 and challenged the ITAT's decision to uphold the deletion of a penalty levied under Section 271(1)(c) of the Act. The penalty was imposed for furnishing inaccurate particulars of income due to a wrong claim of inadmissible legal and professional expenses. The amount in dispute was not specified. The procedural history involves the ITAT's order which is now under challenge before the High Court.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the ITAT was correct in law in upholding the order of the CIT(A) which deleted the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, for furnishing inaccurate particulars of income by making a wrong claim of inadmissible legal and professional expenses. 2. Whether the ITAT erred in law by 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 actually rendered wholly and exclusively for business purposes, as required under Section 37 of the Income Tax Act, 1961. Contentions: Assessee: Submitted that the quantum appeal for the same assessment year (ITA No.186 of 2013) was dismissed on September 6, 2016. Therefore, question No. (ii) would not arise. Further, since the quantum appeal was decided in favour of the assessee, question No. (ii) should also be decided against the revenue. Revenue: Did not record any specific arguments for question (ii) beyond what is implied by the framing of the question itself.

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.759(ASR)/2013, for the assessment year 2002-03, 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.186 of 2013, for the Assessment Year 2002-03 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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