C I T vs. M/S HIGHWAYS INDS. LTD.

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ITA/528/2008HC Punjab & HaryanaPHHC01080529200802 May 2016Author: MR. JUSTICE ASHUTOSH MOHUNTA,MR. JUSTICE ARVIND KUMAR2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as not pressed. The dismissal was based on the Revenue's submission that they did not wish to press the appeal due to the tax effect being below Rs. 20 lacs, as per CBDT Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part). The Court granted liberty to the Revenue to file an application for revival of the appeal if something survived. It was clarified that the withdrawal of the appeal by the Revenue would not be taken as an affirmation of the Tribunal's order on merits, and the legal issues were left open to be adjudicated in an appropriate case. Therefore, no decision was made on the merits of the four substantial questions of law.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Ludhiana-II (the Revenue) against an order dated July 17, 2007, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench (A), for the assessment year 2000-01. The assessee is M/s Highway Industries Ltd., Ludhiana. The appeal was filed under Section 260A of the Income Tax Act, 1961. The Revenue sought to challenge four specific issues decided by the ITAT. However, the Revenue's counsel submitted that in view of CBDT Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part), they did not wish to press the appeal as the tax effect was less than Rs. 20 lacs. The Revenue sought liberty to revive the appeal if something survived. The High Court dismissed the appeal as not pressed.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in law in deleting the addition of Rs. 4,23,000/- on account of estimating the value of closing stock of consumable stores and tools? 2. Whether the ITAT was justified in law in restoring the issue of disallowance of interest on interest-free loan advanced to a sister concern, M/s Gujarat Cycles Inds. Ltd., which was allegedly without any business expediency? 3. Whether the ITAT was justified in deleting the addition of Rs. 2,01,487/- being expenditure incurred on the foreign travels of directors' wives for non-business purposes? 4. Whether the ITAT was justified in directing the Assessing Officer (AO) to exclude turnover discount, interest income, machinery capitalization, carriage outwards, and miscellaneous income from the total turnover while computing deduction under Section 80HHC? Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue's counsel did not press the appeal based on CBDT circulars regarding tax effect. No specific arguments on the merits of the issues were presented.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 02.05.2016 Commissioner of Income Tax, Ludhiana-II .......Appellant Versus M/s Highway Industries Ltd. Ludhiana ......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 17.07.2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), in ITA No. 730/Chandi/2006, for the assessment year 2000-01, raising the following substantial question of law: (i) Whether on the facts and in the circumstance of the case ITAT was justified in law in deleting the addition of ` 4,23,000/- on account of estimating the value of closing stock of consumable stores and tools etc? (ii) Whether on the facts and in law the ITAT was justified to restore back the issue of disallowance of interest on interest free loan advanced to sister concern i.e. M/s Gujrat Cycles Inds. Ltd., which was without any business expediency? REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- (iii) Whether on the facts and in law the ITAT was justified in deleting the addition of ` 2,01,487/- being expenditure incurred on the foreign travels of the director's wives for non-business purpose? (iv) Whether on the facts and in law the ITAT was justified in directing the AO to exclude turnover discount, interest income, machinery capitalization, carriage outwards and Misc. income out of total turnover while computing deduction under Section 80HHC? 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) 02.05.2016 JUDGE reema REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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