C I T vs. M/S REGAL INDUSTRIES LTD.

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ITA/95/2007HC Punjab & HaryanaPHHC01073393200725 April 2016Author: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal as not pressed. The revenue's counsel stated that they did not wish to press the appeal due to the tax effect being below ₹20 lakhs, citing CBDT circulars. The Court granted liberty to the revenue to file an application for revival of the appeal as prayed for. It was clarified that the withdrawal of the appeal by the revenue would not be taken as an affirmation of the ITAT'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 given on the merits of the ITAT's decision regarding the disallowance of interest.

What were the facts?

The appeal was filed by the Commissioner of Income Tax-I, Chandigarh (Revenue) against an order dated 23.8.2006 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench (A), for the assessment year 1997-98. The dispute concerned a proportionate disallowance of interest in relation to an interest-free advance of ₹60 lakhs given by the assessee, M/s Regal Industries Ltd., to its sister concern. The ITAT had deleted this disallowance. The appeal was filed under Section 260A of the Income Tax Act, 1961.

What were the issues?

1. Whether, in the facts and circumstances of the case, the ITAT was justified in deleting the proportionate disallowance of interest in respect of the interest-free advance of ₹60 lakhs to the assessee's sister concern, as per Section 36(1)(iii) of the Income Tax Act, 1961? Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The revenue, through its counsel, submitted that in view of CBDT Circular No. 21/2015 dated 10.12.2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, it did not wish to press the appeal as the tax effect involved was less than ₹20 lakhs. However, liberty was sought to file an application for revival of the appeal if something survived therein.

Which sections of the Income-tax Act were involved?

Section 260A,Section 36(1)(iii)

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 The Commissioner of Income Tax-I, Chandigarh .......Appellant Versus M/s Regal Industries Ltd. ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Ms. Urvashi Dhugga, 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 23.8.2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), in ITA No. 721/Chandi/2001, for the assessment year 1997-98, raising the following substantial question of law: Whether in facts and circumstances of the case, the ITAT was justified in deleting the proportionate disallowance of interest in respect of the interest free advance of ` 60 lakhs to the assessee's sister concern? REEMA SAINI 2016.04.26 14:44 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- 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, she does not wish to press the present appeal, as the tax effect involved is less than ` 20 lacs. However, she 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 2016.04.26 14:44 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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