PRINCIPAL COMMISSIONER OF INCOME TAX -II AMRITSAR vs. M/S THE GURDASPUR CO-OPERATIVE SUGAR MILLS LTD VILLAGE PANIAR GURDASPUR

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ITA/213/2015HC Punjab & HaryanaPHHC01109845201511 December 2015Author: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the Tribunal had relied on the Full Bench judgment of the Punjab & Haryana High Court in The Budhewal Co-operative Sugar Mills Ltd. v. Commissioner of Income Tax. However, the revenue pointed out that an appeal against this judgment was filed before the Supreme Court, which had remanded the matter for fresh adjudication. In light of this development and to ensure that the issue is decided in accordance with the law as interpreted by the higher courts, the High Court remitted the matter back to the Tribunal. The Tribunal is to decide the issue afresh after affording an opportunity of hearing to both parties. The appeals were disposed of accordingly.

What were the facts?

The assessee, M/s The Gurdaspur Co-operative Sugar Mills Ltd., filed its return for assessment year 2007-08 declaring a loss. The Assessing Officer made an addition of Rs. 44,55,335/- on account of scrap. The Commissioner of Income Tax (Appeals) deleted this addition. The revenue appealed to the Income Tax Appellate Tribunal (ITAT), which affirmed the CIT(A)'s order and dismissed the revenue's appeal. The revenue, represented by the Principal Commissioner of Income Tax-II, Amritsar, then filed this appeal under Section 260A of the Income Tax Act, 1961, challenging the ITAT's order dated 22.12.2014.

What were the issues?

1. Whether, in the facts and circumstances, the ITAT erred in deleting the addition of Rs. 44,55,335/- by holding that the sale of scrap generated from the main business partakes of the character of the same income and is eligible for deduction under Section 80P(2)(a)(iii) of the Income Tax Act, 1961? (Question of law) 2. Whether, in the facts and circumstances and in law, the ITAT was right in allowing deduction under Section 80P(2)(a)(iii) for assessment year 2007-08 by following the judgment in Budhewal Coop Sugar Mills vs. CIT (P&H)(FB), when the revenue's appeal on the same issue was pending before the Hon'ble Punjab & Haryana High Court? (Question of mixed law and fact) Assessee's contention: Not recorded. Revenue's contention: The ITAT erred in deleting the addition. The revenue argued that its appeal against the Budhewal Co-operative Sugar Mills Ltd. judgment was pending before the Supreme Court, and therefore, the matter should be remanded to the Tribunal for fresh decision in accordance with the Apex Court's ruling.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(iii),Section 260A,Section 143(1),Section 143(3)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 11.12.2015 The Principal Commissioner of Income Tax-II, Amritsar ....Appellant. Versus M/s The Gurdaspur Co-operative Sugar Mills Ltd. Paniar, Gurdaspur ...Respondent.

1.

Whether the Reporters of the local papers may be allowed to see the judgment?

2.

To be referred to the Reporters or not?

3.

Whether the judgment should be reported in the Digest? CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Denesh Goyal, Advocate for the appellant. Mr. M.R. Sharma, Advocate for the respondent. AJAY KUMAR MITTAL, J.

1.

This order shall dispose of three appeals bearing ITA Nos. 213 of 2015, 210 and 302 of 2012 as learned counsel for the parties are not at variance that all the appeals can be decided together and identical questions of law and facts are involved therein. For brevity, the facts are being extracted from ITA No. 213 of 2015. 2. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the GURBACHAN SINGH 2016.01.07 16:03 I attest to the accuracy and authenticity of this document High Court Chandigarh -2- order dated 22.12.2014 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 55/ASR/2014 for the assessment year 2007-08, claiming the following substantial questions of law:- i) Whether in the facts and circumstances of the case the Hon'ble ITAT has erred in deleting addition of Rs.44,55,335/- by holding that sale of scrap generated from the main business partakes the character of the same income and is eligible for claim of deduction u/s. 80P(2)(a) (iii) of the Income Tax Act, 1961? ii) Whether in the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in allowing deduction u/s 80P(2)(a)(iii) of the I.T. Act, 1961 for the assessment year 2007- 08 by respectfully following the judgment in the (P&H)(FB) reported at (2009) 315 ITR 351, whereas on the same issue, the appeal filed by the Revenue u/s 260A is still pending before the Hon'ble Punjab & Haryana High Court?

3.

A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee filed its return on 31.10.2007 for the assessment year 2007-08 in the status of Cooperative Society (AOP) declaring loss at ` 5,20,19,492/- plus agriculture income of ` 5,62,677/- and had claimed carry forward losses GURBACHAN SINGH 2016.01.07 16:03 I attest to the accuracy and authenticity of this document High Court Chandigarh -3- of earlier year amounting to ` 19,33,40,880/-. The said return was processed on 24.3.2008 under Section 143(1) of the Act. The Assessing Officer framed the assessment vide order dated 4.12.2009 (Annexure A- 1) under Section 143(3) of the Act making an addition of ` 44,55,335/- on account of scrap lying with the assessee at the end of financial year. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 14.11.2013 (Annexure A-2) allowed the appeal and deleted the addition of ` 44,55,335/- on account of scrap. Against the order, Annexure A-2, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 22.12.2014 (Annexure A-3) affirmed the order of the CIT(A) and dismissed the appeal. Hence, the present appeals by the revenue.

4.

We have heard learned counsel for the parties.

5.

The Tribunal on the basis of Full Bench judgment of this Court in The Budhewal Co-operative Sugar Mills Ltd. v. Commissioner of Income Tax (2009) 315 ITR 351 (P&H)(FB) had decided the issue in favour of the assessee. It was submitted by the learned counsel for the appellant that the revenue had filed an appeal against the said judgment before the Apex Court titled Deputy Commissioner of Income Tax v. Budhewal Co-operative Sugar Mills Ltd. (2015) 373 ITR 35 (SC) wherein following its earlier judgment in Morinda Co-operative Sugar Mills Ltd. v. Commissioner of Income Tax (2013) 354 ITR 230 (SC), the Apex Court had remanded the matter back for adjudicating the issue afresh. On the aforesaid premises, it was prayed that these appeals be referred back to the Tribunal for fresh GURBACHAN SINGH 2016.01.07 16:03 I attest to the accuracy and authenticity of this document High Court Chandigarh -4- decision in accordance therewith.

6.

In view of the above, the matter is remitted to the Tribunal to decide the issue afresh in accordance with law after affording an opportunity of hearing to the parties.

7.

The appeals stand disposed of accordingly. (AJAY KUMAR MITTAL) JUDGE December 11, 2015 (RAMENDRA JAIN) gbs JUDGE GURBACHAN SINGH 2016.01.07 16:03 I attest to the accuracy and authenticity of this document High Court Chandigarh

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