COMMISSIONER OF INCOME TAX-I, LUDHIANA vs. M/S ABHISHEK INDUSTRIES LTD. LUDHIANA

ITA/312/2011HC Punjab & HaryanaPHHC01095645201120 December 2012Author: MR. JUSTICE R.P. NAGRATH,MR. JUSTICE SURYA KANT12 pages
AI SummaryAllowed

What were the facts?

The Revenue, represented by the Commissioner of Income Tax-I, Ludhiana, appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated April 29, 2011. The ITAT had cancelled a revisional order passed by the Commissioner under Section 263 of the Income Tax Act, 1961. The original assessment order for Assessment Year 2004-05 was passed by the Assessing Officer (AO) under Section 143(3). The Commissioner initiated proceedings under Section 263, alleging that the AO's order was erroneous and prejudicial to the interest of revenue because deduction under Section 80IA was not deducted from profits before computing deduction under Section 80HHC. The tax effect involved was ₹96,92,017.

What did the High Court hold?

The High Court allowed the appeal, setting aside the ITAT's order and restoring the CIT's revisional order. The Court held that the ITAT had erred in cancelling the CIT's order. The reasoning was that Section 80IA(9) clearly stipulates that where profits are allowed as deduction under Section 80IA, such profits shall not be allowed for deduction under any other provision of Chapter VI-A. Since Section 80HHC falls within Chapter VI-A, the deduction under Section 80HHC cannot be computed on profits already eligible for deduction under Section 80IA. The Court found that the AO's order allowing deduction under Section 80HHC without reducing the profits on which Section 80IA deduction was allowed was an incorrect application of law, making the order erroneous and prejudicial to the interest of revenue. The Court relied on its own precedents and the principles laid down in Malabar Industrial Co. Ltd. v. CIT regarding erroneous and prejudicial orders. The tax effect of ₹96,92,017 was considered significant.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT erred in law by cancelling the CIT's order under Section 263, holding that the AO's order under Section 143(3) was not erroneous, despite the CIT's finding that Section 80IA(9) mandates that profits allowed for deduction under Section 80IA cannot be used for deduction under Section 80HHC, as both fall under Chapter VI-A? Assessee's Contentions: The assessee argued that the AO had taken one of the possible views, supported by the Delhi High Court's decision in CIT vs. Honda Siel Power Products Ltd., and therefore, the revisional powers under Section 263 could not be invoked. They also contended that the ITAT's view was consistent with contrary views from other Tribunals and High Courts. Revenue's Contentions: The Revenue argued that the High Court had settled the position of law in favour of the revenue in several judgments, including M/s Friends Castings (P) Ltd. vs. CIT, Asian Exim International v. CIT, and CIT (Central), Ludhiana v. M/s Davinder Exports, interpreting Section 80IA(9) to mean that deduction under Section 80HHC cannot be computed on profits already claimed under Section 80IA.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 263,Section 80IA,Section 80IA(9),Section 80HHC

AI-generated summary — verify with the full judgment below

-1- PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH Date of Decision: 20.12.2012 Commissioner of Income Tax-I, Ludhiana ........ Appellant Versus M/s Abhishek Industries Limited.

...... Respondent CORAM: HON'BLE MR. JUSTICE SURYA KANT HON'BLE MR. JUSTICE R.P. NAGRATH

1.

Whether Reporters of 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? Present:- Mr. Rajesh Katoch, Advocate for the appellant. Mr. Akshay Bhan, Advocate for the respondent. R.P. NAGRATH, J. This appeal filed by Commissioner of Income Tax-I, Ludhiana under Section 260A of the Income Tax Act, 1961 (for brevity 'IT Act') challenges the order dated 29.04.2011 passed by the Income Tax Appellate Tribunal, Bench 'A', Chandigarh (ITAT).

2.

The facts of the case in brief are that Joint Commissioner, Income Tax, Range-I, Ludhiana, the Assessing officer (AO) passed the assessment order dated 28.12.2006 under Section 143(3) of the IT Act in -2- respect of the respondent-assessee for the assessment year 2004-05. The Commissioner of Income Tax (CIT) exercising his re

The order continues below.

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