COMMR OF INCOME TAX, PANCHKULA vs. M/S SUNIL CHIRAG AND CO. OLD GRAIN MARK.

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ITA/205/2006HC Punjab & HaryanaPHHC01074894200601 December 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the sale of scrap shall form part of the total turnover for the calculation of deduction available to the assessee under Section 80HHC of the Act. This decision was based on the precedent set by the High Court itself in Income-tax Appeal No. 31 of 2002 (Commissioner of Appeal vs. Bicycle Wheels (India)), decided on 11.10.2010. The Court found that the controversy in the present appeals was concluded by this prior judgment. Therefore, the substantial question of law was answered in favour of the Revenue. The appeals were allowed, and the operative direction was to include the sales of brass scrap in the total turnover for calculating the deduction under Section 80HHC.

What were the facts?

The Revenue, Commissioner of Income Tax, Panchkula, filed an appeal against the order dated 8.9.2005 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'A'. The appeal, Income Tax Appeal No. 205 of 2006, pertains to the assessment year 2000-2001 and challenges the ITAT's decision regarding the calculation of deduction under Section 80HHC of the Income Tax Act, 1961. The core of the dispute lies in whether the sale of brass scrap, which constituted more than 50% of the material consumed, should be included in the total turnover for the purpose of this deduction. The High Court heard arguments from both the Revenue and the assessee, M/s. Sunil Chirag & Co., Jagadhari.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that the sales of brass scrap which constitute more than 50% of the material consumed, do not form part of total turnover for calculating deduction u/s 80HHC of the Income Tax Act? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. However, the ITAT's decision, which is under challenge, implies that the assessee argued for the exclusion of brass scrap sales from the total turnover. Revenue's Contention: The Revenue argued that the sale of brass scrap should be included in the total turnover for the calculation of deduction under Section 80HHC of the Act. The Revenue relied on the decision of the High Court in Income-tax Appeal No. 31 of 2002 (Commissioner of Appeal vs. Bicycle Wheels (India), decided on 11.10.2010).

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 260A

AI-generated summary — verify with the full judgment below

Income Tax Appeal No. 205 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 205 of 2006 Date of decision: 1.12.2010 The Commissioner of Income Tax Panchkula --- Appellant Versus M/s. Sunil Chirag & Co. Jagadhari --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Yogesh Putney, Senior Standing Counsel for the appellant. Mr. B.R. Gupta, Advocate for the respondent. --- AJAY KUMAR MITTAL, J. This order will dispose of eight appeals, namely, Income Tax Appeal Nos., 154, 155, 205 to 209 of 2006 and 235 of 2007 as a similar issue is involved therein In Income Tax Appeal No. 205 of 2006 filed under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) by the Revenue against the order dated 8.9.2005, passed by the Income Tax Appellate Tribunal Chandigarh Bench ‘A’, Chandigarh (in short “the Tribunal”) in ITA No. 790/CHANDI/2004, relating to the Income Tax Appeal No. 205 of 2006 2 assessment year 2000-2001, the following substantial question of law has been claimed by the Revenue for determination of this Court: “Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that the sales of brass scrap which constitute more than 50% of the material consumed, do not form part of total turnover for calculating deduction u/s 80HHC of the Income Tax Act?”

We have heard learned counsel for the parties and have perused the record. It is not disputed by learned counsel for the parties that the controversy raising the aforesaid question stands concluded by the decision of this Court in Income-tax Appeal No. 31 of 2002 (Commissioner of Appeal vs. Bicycle Wheels (India), decided on 11.10.2010, wherein it has been held that the sale of scrap shall form part of the total turn-over for calculation of deduction that would be available to the assessee under Section 80HHC of the Act. In view of the above, the appeals are allowed. The substantial question of law as noticed above is answered in favour of the Revenue. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) December 1, 2010 JUDGE *rkmalik*

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