COMMISSIONER OF INCOME TAX,LUD vs. OM PARKASH MUNJAL

ITR/303/1995HC Punjab & HaryanaPHHC01032370199507 January 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI2 pages
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What were the facts?

This case involves a reference under Section 256(1) of the Income Tax Act, 1961, from the Income Tax Appellate Tribunal (ITAT) to the Punjab & Haryana High Court. The appellant is the Commissioner of Income Tax, Patiala, and the respondent is M/s Pure Drinks (New Delhi) Ltd. The ITAT had passed an order on 28.09.1993, referring a substantial question of law for the High Court's opinion. The core of the dispute concerns an addition made by the revenue on account of security received for gas cylinders. The ITAT had previously decided a similar issue for the assessee for assessment year 1980-81, holding that such security receipts were not to be treated as income.

What did the High Court hold?

The Punjab & Haryana High Court, in its order dated 29.04.2013, answered the substantial question of law against the Revenue and in favour of the assessee. The Court's decision was based on its separate order passed on the same day in the case of ITR No. 30 of 1994, titled 'The Commissioner of Income Tax (Central), Ludhiana Vs. Munjal Gases, Hero Nagar, Ludhiana'. By applying the ratio of the Munjal Gases case, the High Court affirmed the principle that security receipts for gas cylinders are not to be treated as part of the assessee's income. Consequently, the addition made by the revenue on this account was deemed incorrect. The operative direction was to answer the question of law in favour of the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in restoring the issue of addition made on account of security received for gas cylinders to the first appellate authority for deciding in tune with the Tribunal’s order dated 24.02.1988 in the assessee’s case for assessment year 1980-81 where it was held by the Tribunal that security receipt was not to be treated as part of the assessee’s income? The Revenue's contention, as implied by the question of law referred, is that the addition made on account of security received for gas cylinders should be upheld as income. The assessee's position, as indicated by the ITAT's prior order and the question referred, is that such security receipts are not income. The Tribunal's action of restoring the issue to the first appellate authority for decision in line with its previous ruling is the subject of the legal question.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH

ITR No.303 of 1995

Date of Decision: 29.04.2013

The Commissioner of Income Tax, Patiala

…Appellant Versus M/s Pure Drinks (New Delhi) Ltd.

…Respondent

CORAM: HON’BLE MR. JUSTICE HEMANT GUPTA

HON’BLE MS. JUSTICE RITU BAHRI

Present: Ms. Savita Saxena, Advocate, for the appellant.

M/s Akshay Bhan & Aalok Mittal, Advocates, for the respondent.

HEMANT GUPTA, J. (ORAL)

By way of present reference under Section 256(1) of the Income Tax Act, 1961 (for short ‘the Act’), the Learned Income Tax Appellate Tribunal (for short ‘the Tribunal’) vide its order dated 28.09.1993 has referred the following substantial question of law for the opinion of this Court: “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in restoring the issue of addition made on account of security received for gas cylinders to the first appellate authority for deciding in tune with Tribunal’s order dated 24.02.1988 in assessee’s case for assessment year 1980-81 where it was held by the Tribunal that security receipt was not to be treated as part of

The order continues below.

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