COMMISSIONER OF INCOME TAX-1 LUDHIANA vs. M/S VARDHMAN TEXTILES LTD. CHD. ROAD LUDHIANA

IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: October 23, 2013. Commissioner of Income Tax

-I, Ludhiana

... Appellant v. M/s Vardhman Textiles Ltd., Ludhiana ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Shri Rajesh Katoch, Advocate, for the appellant. Shri Ajay Vohra and Ms. Radhika Suri, Advocates for the respondent. Rajive Bhalla

, J. (Oral): The revenue is before us in an appeal to challenge order passed by the Income Tax Appellate Tribunal, reversing the order passed by Commissioner of Income Tax (Appeals), as well as the assessment order on a question of law that reads as follows:- “Whether on the facts and circumstances of the case are that the Hon'ble ITAT was right in law in allowing sett off of loss of Rs.2,74,47,311/- suffered by Anant Spinning Mills (Unit-III) against business profits earned by the assessee?” Kadyan Vinod Kumar 2013.11.07 11:59 integrity of this document Chandigarh Counsel for the revenue submits that the assessee has been wrongly allowed set off of the loss of a unit entitled to deduction under Section 10-B of the Income Tax Act, 1961 (hereinafter to be referred as the Act) against profits of another unit, as no such plea was raised before the Assessing Officer at the time of initial assessment. The Income Tax Appellate Tribunal should not have set aside the assessment order and directed the Assessing Officer to reconsider the matter afresh. The proceedings initiated after remand by the Income Tax Appellate Tribunal are, therefore, without jurisdiction. Counsel for the assessee submits that order passed by the Income Tax Appellate Tribunal in the earlier round of litigation, restoring the matter to the Assessing Officer after holding that loss suffered by a unit entitled to deduction under Section 10-B of the Act, could be set off against income of another unit, was not challenged by the revenue, and therefore, cannot be challenged in these proceedings. It is further submitted that it is settled law that the Income Tax Act, 1961 does not enact any impediment prohibiting an assessee from setting off loss of a unit entitled to deduction under Section 10-B of the Act against profits of another unit of the assessee.

We have heard counsel for the parties, perused the impugned order and find no reason to hold that any question of law much less the substantial question of law framed by the revenue arises for adjudication. The argument by counsel for the revenue that the Kadyan Vinod Kumar 2013.11.07 11:59 integrity of this document Chandigarh assessee is not entitled to claim set off of Rs.2,74,47,311/- against profit of another unit, merits summary rejection. In the initial round of litigation, the Income Tax Appellate Tribunal, allowed the assessee to raise an additional ground, after holding that the assessee is entitled to set off loss of the unit entitled to deduction under Section 10-B of the Act against profits of its other unit and, therefore, set aside the assessment order and remitted the matter to the Assessing Officer for consideration afresh. The revenue accepted the order and did not file any appeal. The Assessing Officer, reconsidered the matter and despite order passed by the Tribunal declined relief to the assessee by holding that this point was not raised before him in the initial return. The Commissioner of Income Tax (Appeals) dismissed the appeal filed by the assessee. The Income Tax Appellate Tribunal has rightly reversed these orders as the Assessing Officer and the Commissioner of Income Tax (Appeals) had no jurisdiction to disallow relief after the Income Tax Appellate Tribunal had allowed the assessee to raise an additional ground with respect to point in issue and remitted the matter to the Assessing Officer to decide the matter afresh. A relevant extract from the order passed by Income Tax Appellate Tribunal reads as follows:- “22. It is mentioned that the additional ground raised by the assessee, had already been admitted by the Tribunal, vide decision in ITA No.537/Chd/2004 assessment year 2000-01 dated 25.1.2008. The AO disallowed the claim of the assessee, in view of the Supreme Court decision in the case of Goetze (India) Ltd. v. CIT 284 ITR 323 (SC). However, as pointed out by the ld. Counsel for the assessee, Kadyan Vinod Kumar 2013.11.07 11:59 integrity of this document Chandigarh the ratio of the decision does not define the powers of the Income-tax Act. It is evident that the amendment, as quoted by the CIT(A), in his order, pertains to the assessment year 2001-02 and reference to the brought forward depreciation and losses, whereas in the present case, the relevant assessment year is 2000-01 and set-off claimed by the assessee pertains to the said unit.” A perusal of the order passed by the Income Tax Appellate Tribunal would reveal that the Tribunal has held that on the date relevant to the present controversy, the Act did not prescribe any impediment prohibiting the assessee from setting off the loss in the manner allowed by the Tribunal. The revenue is unable to refer to any statutory provision or precedent, relevant to the assessment year, that would enable us to hold to the contrary. The order passed by the Income Tax Appellate Tribunal granting relief to the assessee is in accordance with law. In view of what has been stated hereinabove, as no substantial question of law arises for adjudication, the appeal is dismissed.

[ Rajive Bhalla ]

Judge

[Dr. Bharat Bhushan Parsoon] October 23, 2013. Judge kadyan Kadyan Vinod Kumar 2013.11.07 11:59 integrity of this document Chandigarh