COMMISSIONER OF INCOME TAX-III, LDH. vs. M/S NAHAR EXPORT LTD. LDH.

ITA/253/2007HC Punjab & HaryanaPHHC01072939200719 October 2016Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE AVNEESH JHINGAN8 pages
AI SummaryDismissed

What were the facts?

This appeal by the Commissioner of Income Tax-III, Ludhiana (Revenue) challenges an order of the Income Tax Appellate Tribunal (Tribunal) for Assessment Year 1998-99. The Tribunal had remanded an issue concerning the assessee, M/s Nahar Export Ltd.'s, claim for deduction under Section 80-IA of the Income Tax Act, 1961. The remand directed the Assessing Officer (AO) to recalculate the deduction using the same method applied to trading loss when allowing deduction under Section 80-HHC. The High Court admitted the appeal only on a specific substantial question of law regarding this direction. A preliminary objection was raised by the assessee regarding the appeal's maintainability due to tax effect being below the monetary limit prescribed by CBDT Circular No. 21/2015. The parties agreed that the aggregate tax effect exceeded the limit, but the tax effect of the admitted question alone was below it.

What did the High Court hold?

The High Court held that the appeal is maintainable. It reasoned that CBDT Circular No. 21/2015 requires the tax effect to be determined on the basis of the aggregate tax effect of all issues against which the Revenue intends to file an appeal, not merely on the tax effect of individual questions admitted for hearing. Paragraphs 4 and 5 of the circular were interpreted to mean that the monetary limit applies to the disputed issues taken together for a relevant assessment year. Therefore, since the aggregate tax effect exceeded `20 lacs, the appeal was maintainable. Regarding the admitted question (Question 2), the Court found that the Tribunal's upholding of the CIT(A)'s finding, which essentially stated that the AO could not have applied a different yardstick for trading activities under Section 80-IA than what was accepted under Section 80-HHC, was a finding of fact and not perverse. The Court concluded that Question 2 raised essentially a question of fact and not a substantial question of law. Consequently, the appeal, though held maintainable, was dismissed on merits.

What were the issues?

1. Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in directing the Assessing Officer to compute the deduction u/s 80-IA by following the method in section 80-HHC(3) for working out profit/loss from trading goods? (Question of mixed law and fact, concerning Section 80-IA and Section 80-HHC). Assessee's contention: The appeal is not maintainable as the tax effect of the admitted question (Question 2) is less than `20 lacs, as per CBDT Circular No. 21/2015. The tax effect for maintainability should be considered on the basis of the admitted question alone, not the aggregate tax effect of all issues initially raised. Revenue's contention: The appeal is maintainable because the aggregate tax effect of all issues raised in the appeal exceeds `20 lacs. The circular requires the tax effect to be determined on the basis of the entire appeal, not just individual questions admitted for hearing.

Which sections of the Income-tax Act were involved?

Section 80-IA,Section 80-HHC,Section 119

AI-generated summary — verify with the full judgment below

ITA no. 253 of 2007(O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 253 of 2007(O&M)

Date of decision :19.10.2016 The Commissioner of Income Tax-III, Ludhiana ......Appellant Versus M/s Nahar Export Ltd. ........Respondent CORAM : HON'BLE MR. JUSTICE S.J.VAZIFDAR,CHIEF JUSTICE HON'BLE MR. JUSTICE DARSHAN SINGH Present: Mr. Rajesh Katoch, Advocate for the appellant.

Mr.Sanjay Bansal, Sr. Advocate with Mr. Amit Parsad, Advocate and Mr. B.S.Monga, Advocate for the respondent. **** S.J. VAZIFDAR, CHIEF JUSTICE.

This is an appeal against the order of the Income Tax Appellate Tribunal (hereinafter referred to as “Tribunal”) pertaining to the Assessment Year 1998-99. 2. The tribunal remanded the issue pertaining to the respondent-assessee's claim for deduction under Section 80 IA of the Income Tax Act, 1961 (for short “Act”) with a direction to the Assessing Officer (for short 'A.O') to recalculate the same by applying the same method which had been followed in respect of the trading loss while allowing the deduction under Section 80 Sanjay Khan 2016.10.25 09:28 I attest to the accuracy and authenticity of this document

The order continues below.

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