COMMISSIONER OF INCOME TAX-II, LUDHIANA. vs. M/S ROCKMAN CYCLES INDUSTRIES LTD.,

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ITA/651/2008HC Punjab & HaryanaPHHC01080663200802 May 2016Author: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as not pressed. The Revenue, citing CBDT Circulars No. 21/2015 and No. 279/Misc/M-142/2007-ITJ (Part), stated that it did not wish to press the appeal due to the tax effect being less than Rs. 20 lacs. The Court granted liberty to the Revenue to file an application for revival of the appeal if something survives therein. 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 specific findings were given on the merits of the three substantial questions of law.

What were the facts?

The Revenue (Commissioner of Income Tax, Ludhiana-II) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 16.10.2007 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench (A). The appeal pertained to assessment year 2002-03 and concerned additions made by the Assessing Officer, which were subsequently deleted by the ITAT. The disputed amounts involved were Rs. 4,54,349/- for foreign travel of director's spouses, Rs. 1,00,000/- on account of closing stock of consumable stores and machinery repair, and expenditure on the death anniversary of an ex-director. The appeal was listed for hearing before the High Court of Punjab and Haryana.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in deleting the addition of Rs. 4,54,349/- representing expenditure incurred on the foreign travels of the director's spouses for non-business purposes (Section 37(1) of the Act). 2. Whether the ITAT was justified in deleting the addition of Rs. 1,00,000/- made by estimating the value of closing stock of consumable stores and machinery repair. 3. Whether the ITAT was justified in treating the expenditure incurred on the death anniversary of the ex-director as admissible expenditure, considering it was not connected with the business of the assessee, and if the finding was perverse (Section 37(1) of the Act). The Revenue's contentions were based on the grounds raised in the appeal, challenging the ITAT's deletions. The Assessee's contentions were not recorded in the provided text. The Revenue, however, stated that in view of CBDT Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part), it did not wish to press the appeal as the tax effect was less than Rs. 20 lacs.

Which sections of the Income-tax Act were involved?

Section 260A,Section 37(1)

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 Rockman Cycle Industries 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 16.10.2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), in ITA No. 928/Chandi/2006, for the assessment year 2002- 03, raising the following substantial question of law: (i) Whether on the facts and in law the ITAT was justified in deleting the addition of ` 4,54,349/- being expenditure incurred on the foreign travels of the director's spouses for non-business purpose? (ii) Whether on the facts and in the circumstances of the case ITAT was justified in law in deleting the addition of ` One lakh on account of estimating the value of closing stork of consumable store, machinery repair etc.? (iii) Whether on the facts and in law the ITAT was REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- justified in treating the expenditure incurred on the death anniversary of the Ex Director of the company as admissible expenditure as the expenditure so incurred was not in any way connected with the business of the assessee and a perverse finding? 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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