CIT PATIALA vs. M/S MAGHAN PAPER MILLS P.LTD.S

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Order: 10.12.2013 The Commissioner of Income-tax, Patiala ...Appellant Versus M/s Meghan Paper Mills (P) Ltd., Sangrur ..Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Ms. Savita Saxena, Advocate for the appellant. Mr. Akshay Bhan, Advocate and Ms. Samiya Singh, Advocate, for the respondent. RAJIVE BHALLA, J (Oral) The Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, has forwarded a question of law for an answer, which reads as follows:- “Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the deficiency u/s 80-J could be carried over for an indefinite period in view of the provisions of Section 80-VVA(4) when the carry forward of deficiency u/s 80-J cannot be allowed beyond the seventh year from the end of the initial year?” Kumar Naresh N 2013.12.17 10:50 integrity of this document High Court Chandigarh -2- Counsel for the revenue submits that the Income Tax Appellate Tribunal and the CIT(A) have erred in granting benefit of eight years by excluding the initial assessment year. It is contended that Section 80-J of the Income Tax Act (hereinafter referred to as 'the Act'), clearly provides that benefit of deduction shall only be available for a period of seven years. In support of the said arguments, counsel for the revenue relies upon the first proviso to Section 80-J (3) of the Act. Counsel for the assessee submits that a perusal of the proviso clearly reveals that deficiency or any part thereof shall not be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year, thereby leaving no ambiguity that the initial assessment year has to be excluded. The order passed by the Income Tax Appellate Tribunal, affirming order passed by the CIT(A), therefore, does not suffer from any error of law as would require interference.

We have heard counsel for the parties. Section 80-J as well as the first proviso to sub-section (3), read as follows:- 80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.--(1) Where the gross total income of an assessee Kumar Naresh N 2013.12.17 10:50 integrity of this document High Court Chandigarh -3- includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the deduction if any, admissible to the assessee under Section 80HH or section 80HHA) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent, per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the manner specified in sub- section (1A) in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year): ........” 3(i) in no case shall the deficiency or any part thereof be carried forward beyond the seventh assessment year as reckoned from the end of Kumar Naresh N 2013.12.17 10:50 integrity of this document High Court Chandigarh -4- the initial assessment year.” A perusal of the proviso, leaves no ambiguity as to legislative intent that deficiency or any part thereof can be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year. In the absence of any ambiguity as to the meaning of the words and expressions used in the aforesaid proviso, we find no reason to hold that the order passed by the ITAT affirming order passed by the CIT(A) is contrary to the provisions of the Act or raises any question of law much less the question forwarded for an answer. The reference is answered, accordingly. (RAJIVE BHALLA) JUDGE December 10, 2013 (DR. BHARAT BHUSHAN PARSOON) nt

JUDGE Kumar Naresh N 2013.12.17 10:50 integrity of this document High Court Chandigarh