COMMISSINER OF INCOME TAX, LDH. vs. DEE KAY KNITWEARS, LDH.

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ITA/155/2007HC Punjab & HaryanaPHHC01072830200718 July 2013Author: MR. JUSTICE RAJIVE BHALLA,MR. JUSTICE DR. BHARAT BHUSHAN PARSOON2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that both questions of law were to be answered against the Revenue and in favour of the assessee. The Court noted that question (i), concerning insurance claims and foreign exchange fluctuation, had been decided against the Revenue in ITA No.165 of 2007 (Commissioner of Income Tax-I, Ludhiana v. Venus Fabrics, Ludhiana) and ITA No.539 of 2008 (Commissioner of Income Tax-I, Ludhiana v. Sarin Industrial Corporation). Similarly, question (ii), regarding sales tax and CST, had been decided against the Revenue in ITA No.539 of 2006 (Commissioner of Income Tax-I, Ludhiana v. Sarin Industrial Corporation). Based on the agreement of the counsel for both parties that these matters were decided in the aforementioned appeals, the High Court applied those decisions. The operative direction was to dismiss the appeal. No issue was expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Ludhiana, filed an appeal before the High Court of Punjab and Haryana at Chandigarh challenging an order dated 31.8.2006 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-A. The appeal pertains to the assessment year(s) not explicitly stated in the provided text. The dispute centers on the computation of deduction under Section 80HHC of the Income Tax Act. The ITAT's order was challenged on two specific questions of law. The High Court admitted the appeal on these questions. The procedural history indicates that the parties agreed that the issues raised in the appeal had been decided in other, separately decided appeals by the High Court on the same date.

What were the issues?

The High Court had to decide two questions of law: 1. Whether the ITAT was justified in holding that insurance claims and exchange rate fluctuations were not 'other receipts' and therefore 90% of such receipts could not be reduced from the 'profit of business' under clause (baa) of Explanation below Section 80HHC(4C) of the Income Tax Act. 2. Whether the ITAT was correct in holding that sales tax and CST were not includible in the total turnover for computing deduction under Section 80HHC of the Income Tax Act, when these taxes were realized as part of the sale proceeds. Contentions: Assessee: The judgment does not explicitly record the assessee's contentions. However, it is implied that the assessee supported the ITAT's findings. Revenue: The Revenue argued that insurance claims and exchange rate fluctuations should be considered 'other receipts' and that sales tax and CST should be included in the total turnover for the purpose of Section 80HHC deduction. The Revenue relied on the grounds stated in the questions of law.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 80HHC(4C)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: July 18, 2013. Commissioner of Income Tax-I, Ludhiana ... Appellant v. Dee Kay Knitwears, 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 Sunil Kumar Mukhi, Advocate for the respondent. Rajive Bhalla

, J. (Oral): The revenue has filed this appeal challenging order dated 31.8.2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh. The appeal was admitted on the following questions of law:- “(i) Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that insurance claim and exchange rate fluctuation were not in the nature of 'other receipts' and 90% of such receipts could not be reduced from 'profit of business' under clause (baa) of Explanation below Section 80 HHC(4C) of I.T. Act? (ii) Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was correct in holding that the sales tax and CST were not includible in total turnover for Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh computing deduction under section 80HHC of I.T. Act, when the sale tax and CST were realized as part of sale proceeds of the goods manufactured by the respondent? Counsel for the parties agree that question No.(i), which consists of two parts, namely foreign exchange fluctuation and insurance claim, have been answered against the revenue and in favour of the assessee in ITA No.165 of 2007, Commissioner of Income Tax-I, Ludhiana v. Venus Fabrics, Ludhiana, and ITA No.539 of 2008, Commissioner of Income Tax-I, Ludhiana v. Sarin Industrial Corporation, decided separately by order of even date. As regards the second question of law, it is agreed that the question has been decided against the revenue and in favour of the assessee in ITA No.539 of 2006, Commissioner of Income Tax-I, Ludhiana v. Sarin Industrial Corporation, decided vide order of even date passed separately. In view of the agreement of counsel for the parties, we answer questions No.(i) and (ii) in terms of orders of even date passed separately in ITA No.165 of 2007 and ITA No.539 of 2006 against the revenue and in favour of the assessee. The appeal is accordingly dismissed.

[ Rajive Bhalla ]

Judge

[Dr. Bharat Bhushan Parsoon] July 18, 2013. Judge kadyan Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh

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