CIT vs. M/S HARYANA STATE CO OP SUPPLY & MKTG FED PKL

ITA/585/2010HC Punjab & HaryanaPHHC01093534201018 January 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL2 pages
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What were the facts?

The Revenue, Commissioner of Income-Tax, Panchkula, appealed under Section 260A of the Income Tax Act, 1961, against an order dated 29.1.2010 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'B'. The ITAT's order was in relation to ITA No.951/Chd/2009 for the assessment year 2006-07. The appeal challenged the ITAT's decision to allow a deduction under Section 80P(2)(e) of the Act to the assessee, M/s Haryana State Co-op Supply & Marketing Federation, and its directions regarding the calculation of proportionate expenses for this deduction. The core of the dispute was whether the assessee's income from storage/custody receipts was business income and thus eligible for the deduction.

What did the High Court hold?

The High Court held that the substantial questions of law were decided in favour of the revenue. The Court noted that the questions raised had already been decided in favour of the revenue by this very Court in a previous order dated 8.9.2010 in ITA No.157 of 2005 (CIT Vs. M/s Haryana State Cooperative Supply & Marketing). Based on this precedent, the Court answered the substantial questions of law in favour of the revenue. Consequently, the appeal filed by the revenue was allowed. The operative direction was to allow the appeal, implying the reversal of the ITAT's order regarding the deduction under Section 80P(2)(e) and the directions for expense calculation. No issue was expressly left undecided.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether on the facts and circumstances of the case and in law, the learned ITAT has erred in allowing deduction u/s 80P(2)(e) of the IT Act, 1961, when the income of the assessee by way of storage/custody receipt is in the nature of business receipt? 2. Whether the Hon'ble ITAT was justified in issuing directions to the Assessing Officer regarding the calculation of the correct amount of proportionate expenses for deduction u/s 80P(2)(e) of the Act when the deduction u/s 80P(2)(e) itself is not available to the assessee? The Revenue contended that the ITAT erred in allowing the deduction under Section 80P(2)(e) because the income from storage/custody receipts was business income. The Revenue also argued that the ITAT was not justified in directing the Assessing Officer on the calculation of proportionate expenses when the deduction itself was not admissible. The judgment records no specific arguments from the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80P(2)(e)

AI-generated summary — verify with the full judgment below

Income-tax Appeal No.585

of 2010

-1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.585

of 2010

Date of decision: 18.1.2011 Commissioner of Income-Tax, Panchkula ...Appellant Versus M/s Haryana State Co-op Supply & Marketing Federation ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Ygoesh Putney, Advocate for the appellant. Mr. Rajesh Garg, Advocate for the respondent.

**** ADARSH KUMAR GOEL, J (

Oral)

.

1.

This Appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) against order dated 29.1.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh in ITA No.951/Chd/2009, for the assessment year 2006-07, raising following substantial questions of law:- “a) Whether on the facts and circumstances of the case and in law, the ld. ITAT has erred in allowing deduction u/s 80(P)(2)(e) of the IT Act, 1961 whereas it has been held that the income of the assessee by the way of storage/custody receipt

Income-tax Appeal No.585

of 201

The order continues below.

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