COMMISSIONER OF INCOME-TAX, PANCHKULA vs. M/S HOUSING BOARD, PANCHKULA

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ITA/207/2011HC Punjab & HaryanaPHHC01095529201114 November 2011Author: MR. JUSTICE HEMANT GUPTA,MR. JUSTICE GURMEET SINGH SANDHAWALIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT's finding that the amount of Rs.7,09,57,404/- was allowed as a one-time expenditure in view of the Board of Directors' decision dated 18.04.2002 was a finding of fact. The Court noted that this decision was relatable to the assessment year under consideration and that the decision to allow rebate was a commercial decision taken in the circumstances of the case, where rebate was granted to certain institutional bodies against advances received over a period. The Court found the Revenue's argument that the assessee had not produced additional evidence to justify the expenditure in the relevant assessment year after the earlier ITAT order to be untenable. The Court concluded that the documents on record proved that the rebate was allowed as a one-time expenditure during the relevant assessment year pursuant to the Board of Directors' decision, which was a finding of fact. Therefore, no substantial question of law arose for consideration. The appeal was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax-III, Panchkula, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order dated 14.10.2010 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, Chandigarh. The appeal pertains to the assessment year 2003-04. The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)] in deleting an addition of Rs.7,09,57,404/-. The Revenue's contention was that the assessee, M/s Housing Board, Haryana, failed to furnish required details to the Assessing Officer (AO) and did not establish the allowability of the expenditure as it lacked a legal obligation. The ITAT had previously directed the assessee to provide specific information.

What were the issues?

1. Whether on the facts and circumstances of the case, the learned ITAT is justified in confirming the order of the CIT(A) in deleting the addition of Rs.7,09,57,404/- despite the fact that the assessee has failed to furnish the information/details called for by the A.O. as per earlier specific directions of the Hon’ble ITAT on this issue? 2. Whether on the facts and circumstances of the case, the learned ITAT is justified in deleting the additions of Rs.7,09,57,404/- despite the fact that the assessee has failed to establish that this expenditure was an allowable expenditure as the assessee had no legal obligation of incurring such expenditure? 3. Whether on the facts and circumstances of the case, the learned ITAT is justified in holding that the expenditure of Rs.7,09,57,404/- is entirely relatable to the year under consideration ignoring the fact that the relevant details have not been filed by the assessee before the Assessing Officer as per its specific direction? Assessee's arguments: The ITAT found that the amount of Rs.7,09,57,404/- was allowed as a one-time expenditure based on a Board of Directors' decision dated 18.04.2002. This decision was relatable to the assessment year in question, and the rebate was a commercial decision taken in circumstances where rebate was allowed to certain institutional bodies against advances received between 1991 and 2002. Revenue's arguments: The Revenue argued that the assessee had not produced any additional evidence to justify the expenditure in the relevant assessment year after the earlier order of the Tribunal dated 27.02.2007. The Revenue contended that the assessee failed to furnish details called for by the AO and did not establish a legal obligation for the expenditure.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 14.11.2011 Commissioner of Income Tax-III, Panchkula …Appellant Versus M/s Housing Board, Haryana …Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE G.S.SANDHAWALIA Present : Mr. Tejinder K. Joshi, Advocate, for the appellant. Mr. M.R.Sharma, Advocate, for the respondent. HEMANT GUPTA, J. (Oral) The Revenue is in appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) raising following substantial question of law arising out of the order dated 14.10.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short ‘the Tribunal’) for the assessment year 2003-04:

1.

Whether on the facts and circumstances of the case, the learned ITAT is justified in confirming the order of the CIT(A) in deleting the addition of Rs.7,09,57,404/- despite the fact that the assessee has failed to furnish the information/details called for by the A.O. as per earlier specific directions of the Hon’ble ITAT on this issue?

2.

Whether on the facts and circumstances of the case, the learned ITAT is justified in deleting the additions of Rs.7,09,57,404/- despite the fact that the assessee has failed to establish that this expenditure was an allowable expenditure as the assessee had no legal obligation of incurring such expenditure?

3.

Whether on the facts and circumstances of the case, the learned ITAT is justified in holding that the expenditure of Rs.7,09,57,404/- is entirely relatable to the year under consideration ignoring the fact that the relevant details have not been filed by the assessee before the Assessing Officer as per its specific direction? Learned Tribunal has found that the amount of Rs.7,09,57,404/- was allowed as one time expenditure in view of the decision of the Board of Directors dated 18.04.2002. The said decision was relatable to the present assessment year and that the decision to allow rebate by the Board of Directors was a commercial decision taken in the circumstances of the case, where rebate was allowed to certain institutional bodies i.e. Insurance Companies, HSIDC, HFC etc. against the advances received during the years 1991 to 2002. The argument of learned counsel for the appellant that the assessee has not produced any additional evidence to justify the expenditure in the relevant assessment year after the earlier order of the Tribunal dated 27.02.2007 is not tenable. The documents on record prove that rebate was allowed as one time expenditure during the relevant assessment year in pursuance of the decision of the Board of Directors. It is finding of fact. Therefore, no substantial question of law arises for consideration by this Court. Consequently, the present appeal is dismissed. (HEMANT GUPTA) JUDGE 14.11.2011 (G.S.SANDHAWALIA) Vimal JUDGE 2

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