CIT, HISAR vs. JIND COOP SUGAR MILLS LTD.

ITA/694/2010HC Punjab & HaryanaPHHC01093655201014 December 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed to the High Court against an order of the Income Tax Appellate Tribunal (ITAT). The assessee, Jind Co-op. Sugar Mills Ltd., a cooperative society engaged in manufacturing and selling sugar, claimed deduction for interest paid on loans. The Assessing Officer (AO) disallowed a portion of this deduction, arguing that the assessee had advanced interest-free loans to other cooperative societies, implying these funds were not utilized for its own business. The CIT(A) partly allowed the assessee's appeal, noting that a loan advanced to M/s Bhuna Coop. Sugar Mills had been settled in full, and that mill was under winding up. The ITAT upheld the CIT(A)'s finding, dismissing the Revenue's appeal.

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court found the Revenue's submission, relying on CIT v. Abhishek Industries Ltd., to be distinguishable. The Court noted that the Abhishek Industries case involved advancing a loan to a sister concern, whereas the present case concerned a bonafide loan advanced for business purposes. The Court also referred to the principle laid down in Mcdowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC) regarding the taxation of real income where tax liability is avoided by manipulation. The High Court held that the findings of the Tribunal were not perverse and therefore, no error was found in the Tribunal's view. Consequently, no substantial question of law arose for consideration.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in confirming the reduction of disallowance of Rs.74,98,294/- to Rs.10,87,177/- made on account of interest on interest-free loans without appreciating that money to the extent of the interest-free loan was not utilized by the assessee society for its own business purposes. Assessee's contentions: Not recorded in the judgment. Revenue's contentions: Relied on the judgment of this Court in CIT v. Abhishek Industries Ltd. (286 ITR 1) to argue that interest on borrowed capital cannot be allowed as a deduction if the assessee had advanced a loan to its sister concern.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.694 of 2010 (O&M) Date of decision: 14.12.2010 Commissioner of Income Tax. -----Appellant. Vs. Jind Co-op. Sugar Mills Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Sr.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, New Delhi dated 19.6.2009 in I.T.A. No.583/DEL/2009 claiming following substantial question of law:-

“Whether on the facts and in the circumstances of the case, the learned ITAT was right in confirming the reduction of disallowance of Rs.74,98,294/- to Rs.10,87,177/- made on account of interest on interest free loans without appreciating the facts that money to the extent of interest free loan has not been utilized by the assessee society for its own business purposes.”

I.T.A. No.694 of 2010

2.

The assessee is a cooperative society engaged in manufacture and sale of sugar. It claimed deduction in respect of interest payment on

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 260-A

All 2,347 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →