COMMISSIONER OF INCOME TAX-II, LUDHIANA vs. M/S AVON CYCLES LTD. ETC. LUDHIANA

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ITA/900/2010HC Punjab & HaryanaPHHC01093883201011 May 2016Author: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryWithdrawn

What did the High Court hold?

The appeal was dismissed as not pressed. The Revenue's counsel, citing Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part), stated that they did not wish to press the appeal as the tax effect involved was less than INR 20 lacs. The Revenue prayed for liberty to file an application for revival of the appeal if something survived therein. The Court granted this liberty. The Court clarified that the withdrawal of the appeal by the Revenue would not be taken as an affirmation of the Tribunal's order on merits. The legal issue, as claimed by the Revenue, was left open to be adjudicated in an appropriate case. No finding was reached on the merits of the substantial questions of law.

What were the facts?

The Revenue, the Commissioner of Income Tax-II, Ludhiana, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 30.04.2010 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Benches. The ITAT's order concerned ITA No. 25/Chd/2009 for the assessment year 2006-07. The appeal challenged the ITAT's decision to hold the Commissioner's order passed under Section 263 of the Act as invalid and to quash it. The dispute revolved around the disallowance under Section 14A of the Act and whether the Assessing Officer's assessment was erroneous and prejudicial to the interest of the revenue. The amount in dispute is not explicitly stated but is implied to be below INR 20 lacs based on the revenue's submission.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding the order of the Commissioner of Income-tax passed under Section 263 of the Act as invalid and in quashing the same on the issue of disallowance under Section 14A of the Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding the order of the Commissioner of Income-tax passed under Section 263 of the Act as invalid and in quashing the same on the issue of disallowance under Section 14A of the Act, despite the assessment made by the Assessing Officer being erroneous and prejudicial to the interest of the revenue within the meaning of Section 263 of the Act? The Revenue argued that the assessment made by the Assessing Officer was erroneous and prejudicial to the interest of the revenue. The Assessee's arguments are not recorded in the judgment. The Revenue relied on Circular No. 21/2015 dated 10.12.2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016.

Which sections of the Income-tax Act were involved?

Section 260A,Section 263,Section 14A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 11.05.2016 The Commissioner of Income Tax-II, Ludhiana .......Appellant Versus M/s Avon Cycles Ltd., ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Mr. Zora Singh Klar, Advocate for the appellant. Mr. Alok Mittal, Advocate for the respondent. RAJESH BINDAL,J. This appeal has been filed under Section 260 A of the Income Tax Act, 1961 (for short 'the Act'), against the order dated 30.04.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Benches (B) Chandigarh, in ITA No. 25/Chd/2009, for the assessment year 2006-07, raising the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in holding the order of Commissioner of Income-tax passed under Section 263 of the Act as invalid and in quashing the same on the issue of disallowance under section 14A of the Act? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in holding the order of Commissioner of Income-tax passed under Section 263 of the Act as invalid and in quashing the REEMA SAINI 2016.05.18 11:22 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- same on the issue of disallowance under Section 14A of the Act though the assessment made by the A.O. was erroneous and prejudicial to the interest of revenue within the meaning of Section 263 of the Act? Learned counsel for the appellant-revenue submitted that in view of circular No.21/2015 dated 10.12.2015 read with circular No.279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by Central Board of Direct Taxes, he does not wish to press the present appeal, as the tax effect involved is less than ` 20 lacs. However, he prays that liberty be granted to the revenue to file an application for revival of the appeal in case something survives therein. Dismissed as not pressed with liberty as prayed for. It is however, clarified that withdrawal of the appeal by the revenue shall not be taken as affirmation of order of the Tribunal on merits. The legal issue as claimed by the revenue is left open to be adjudicated in an appropriate case. (RAJESH BINDAL)

JUDGE (HARINDER SINGH SIDHU) 11.05.2016 JUDGE reema REEMA SAINI 2016.05.18 11:22 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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