C I T vs. M/S AVERY CYCLES INS. LTD.

PDF · subscribers
ITA/589/2007HC Punjab & HaryanaPHHC01073301200725 April 2016Author: MR. JUSTICE ASHUTOSH MOHUNTA,MRS. JUSTICE REKHA MITTAL2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as not pressed, granting liberty to the revenue to file an application for revival of the appeal as prayed. 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 issues raised by the revenue were left open to be adjudicated in an appropriate case. Therefore, the Tribunal's findings on the three issues (disallowance of hospitality expenses, inclusion of sales tax in turnover for Section 80HHC deduction, and allowability of interest-free loan) were not adjudicated on merits by the High Court in this proceeding. The operative direction was the dismissal of the appeal with liberty to revive.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Ludhiana-II (the revenue) against an order dated 27.7.2005 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B). The assessment year in question was 1996-97. The appeal was filed under Section 260A of the Income Tax Act, 1961. The respondent in the appeal was M/s Avery Cycle Industries Ltd. The revenue sought to challenge three specific issues decided by the Tribunal. During the proceedings, the revenue's counsel submitted that in view of CBDT circulars, they did not wish to press the appeal as the tax effect was below Rs. 20 lacs, but requested liberty to revive the appeal if any part of it survived.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the Tribunal was legally right in upholding the CIT(A)'s order deleting the addition made by the Assessing Officer on account of disallowance of expenditure incurred on hospitality provided to persons other than employees? This question turns on the interpretation of provisions related to disallowance of expenditure. 2. Whether the Tribunal was correct in holding that Central Sales Tax and Sales Tax amounting to Rs. 53,50,035/- should not form part of total turnover for the computation of deduction under Section 80HHC? This issue relates to the computation of deduction under Section 80HHC. 3. Whether the Tribunal was right in upholding that the interest-free loan advanced to Mrs. Archna Dalmia was correct? This question concerns the allowability of interest-free loans. The revenue's contentions were not fully detailed as the appeal was not pressed. However, the revenue sought liberty to revive the appeal. The judgment does not record specific arguments made by the respondent (assessee) on these issues.

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: 25.04.2016 Commissioner of Income Tax, Ludhiana-II .......Appellant Versus M/s Avery 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 27.7.2005 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B), in ITA No.600/Chandi/1999, for the assessment year 1996-97, raising the following substantial questions of law: (i) Whether on the facts and in the circumstances, the Tribunal was legally right to uphold the order of the CIT (A) in deleting the addition made by Assessing Officer on account of disallowance of expenditure incurred on provisions of hospitality to the persons other than the employees? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was correct on upholding that the Central Sales Tax and Sales Tax amounting to Rs.53,50,035/- be not form the part of total REEMA SAINI 2016.04.28 10:28 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- turnover while computation of deduction u/s 80HHC? (iii) Whether on the facts and the circumstances of the case Hon'ble ITAT was right in Law and facts in upholding that the interest free loan advanced to Mrs. Archna Dalmia was correct? 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) 25.04.2016 JUDGE reema REEMA SAINI 2016.04.28 10:28 I attest to the accuracy and authenticity of this document High Court, Chandigarh

More judgments on Section 80HHC

All 1,083 judgments and leading authorities on Section 80HHC →

Recent GST High Court judgments

Search GST case law →