COMMISSIONER OF INCOME TAX-II LUDHIANA vs. M/S ANAND CONCAST LTD.

ITA/33/2011HC Punjab & HaryanaPHHC01095664201127 January 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
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What were the facts?

The Revenue, represented by the Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh. The appeal challenged the ITAT's decision concerning the assessment of profit on Duty Exemption Pass Book (DEPB) entitlements and the charging of interest under Section 234D. The ITAT had previously decided the matter, and the Revenue sought to raise substantial questions of law before the High Court. The procedural history indicates that the ITAT's order was dated June 25, 2010, and the High Court's decision was rendered on January 27, 2011.

What did the High Court hold?

The High Court disposed of questions (i) to (vi) by referring to an earlier order of the same court dated August 16, 2010, in ITA No. 299 of 2010 (CIT v. M/s F.C. Sondhi & Company (P) Ltd.), which had remanded the matter to the Tribunal. The court stated that subject to the respondent's right to move the court if aggrieved, these questions would be disposed of in the same terms as the earlier order. Regarding questions (vii) and (viii) concerning interest under Section 234D for Assessment Year 2001-02, the court held that since Section 234D was incorporated only with effect from June 1, 2003, it could not apply to the assessment year in question. The Tribunal's view on this aspect was found to be not erroneous, and therefore, no interference was called for. These questions were accordingly not held to be substantial questions of law. The appeal was disposed of.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the total sale consideration of DEPB, including any premium, represents profit chargeable under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961. 2. Whether the profit on transfer of DEPB entitlement includes the entire amount received, including any premium. 3. Whether the word "profit" in Sections 28(iiid) and 28(iiie) means the difference between the sale price and face value of DEPB, or the entire sale amount. 4. Whether the face value of DEPB should be deducted from the sale price to calculate profit under Sections 28(iiid) and 28(iiie), treating the face value as cost. 5. Whether an artificial cost (face value of DEPB/DFRC) should be interpolated to determine deduction under Section 80HHC. 6. Whether the deduction under Section 80HHC was correctly computed following the amendment by the Taxation Laws (Amendment) Act, 2005. 7. Whether the ITAT was justified in deleting the charge of interest under Section 234D for Assessment Year 2001-02, given the order was made on December 5, 2008. 8. Whether Section 234D is applicable to actions taken after June 1, 2003, irrespective of the Assessment Year. Contentions: Assessee: Not recorded in the judgment. Revenue: Argued that the entire sale consideration of DEPB, including premium, represents profit chargeable under Sections 28(iiid) and 28(iiie). They contended that the face value should not be deducted as cost and that Section 234D interest was rightly chargeable as the order was passed after its inception.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 28(iiid),Section 28(iiie),Section 80HHC,Section 234D

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.33 of 2011 (O&M) Date of decision: 27.1.2011 The Commissioner of Income Tax. -----Appellant. Vs. M/s Anand Concast Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Denesh Goyal, Standing counsel for the Revenue. --- ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 25.6.2010 in I.T.A. No.252/CHD/2010 proposing to raise following substantial questions of law:- “(i) Whether on the facts and circumstances of the case, the ITAT was right in law in not holding that total sale consideration inclusive of face value of DEPB and premium amount received thereof represents profit chargeable under sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961? (ii) Whether on the facts and circumstances of the case, the ITAT was right in law in not holding that profit on transfer of DEPB entitlement represents the entire amount inclusive of premium of sale of such DEPB? (iii) Whether on the facts an

The order continues below.

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