COMMISSIONER OF INCOME TAX FARIDABAD vs. M/S P.R. PACKAGING LTD.

ITA/445/2010HC Punjab & HaryanaPHHC01093379201015 September 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL9 pages
AI SummaryDismissed

What were the facts?

The Revenue (Commissioner of Income-tax, Faridabad) appealed against an order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench, for assessment year 2005-06. The assessee, M/s. P.R. Packaging Ltd., initially declared NIL income. The Assessing Officer (AO) completed the assessment under Section 143(3) at Rs. 39,65,890/-, making additions of Rs. 2,57,417/- for deferred revenue expenditure and Rs. 50,18,599/- for bogus purchases. The Commissioner of Income-tax (Appeals) partly allowed the assessee's appeal, granting relief of Rs. 56,16,739/- and confirming an addition of Rs. 1,14,981/-. The ITAT upheld the CIT(A)'s order deleting the additions of Rs. 2,57,417/- and Rs. 50,18,599/-. The High Court considered the Revenue's appeal against the ITAT's order.

What did the High Court hold?

The High Court held that no substantial question of law arose. Regarding the first issue, the Court noted that the CIT(A) deleted the addition of Rs. 2,57,417/- on deferred revenue expenditure, observing that the AO had taken a view in prior assessment years allowing depreciation on moulds and dyes. The CIT(A) found that depreciation allowable would be higher than the claimed deferred revenue expenditure, and thus no addition was called for. The Tribunal affirmed this order. The High Court found no error or perversity in this finding. Regarding the second issue, the Court noted that the CIT(A) had allowed the assessee's claim after detailed verification of documents and evidence, concluding that purchases from four parties were genuine, supported by PANs and payments via account payee cheques. The Tribunal affirmed these findings. The High Court found that the appellate authorities had appreciated the material on record and arrived at a conclusion that the purchases were genuine, and the Revenue could not point out any material or error of law to warrant interference. Therefore, the appeal was dismissed.

What were the issues?

The Tribunal had to decide two substantial questions of law raised by the Revenue: 1. Whether, on the facts and in the circumstances, the ITAT was right in law in upholding the CIT(A)'s deletion of the Rs. 2,57,417/- addition for deferred revenue expenditure, despite the assessee failing to furnish evidence and contrary to the decision in CIT v. Ashoka Betelnut Co. (P) Ltd. (2003) 259 ITR 733. The Revenue argued that the assessee failed to provide justification and that the ITAT's decision was contrary to established legal principles regarding deferred revenue expenditure. 2. Whether, on the facts and in the circumstances, the ITAT was right in law in upholding the CIT(A)'s deletion of the Rs. 50,18,599/- addition for bogus purchases, despite the assessee failing to prove their genuineness. The Revenue contended that the assessee did not prove the genuineness of these purchases.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 32(1)(iii),Section 46A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. --- Date of decision: 15.9.2010 Commissioner of Income-tax Faridabad --- Appellant Versus M/s. P.R. Packaging Ltd. Ballabgarh --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- PRESENT: Ms. Urvashi Dhugga, Advocate for the appellant. --- AJAY KUMAR MITTAL, J.

This appeal under Section 260A of the Income-tax Act, 1961 (for short “the Act’”) has been filed by the Revenue against the order dated 13.11.2009, passed by the Income Tax Appellate Tribunal, Delhi Bench “F” New Delhi, (in short “the Tribunal”) in Income-tax Appeal No. 2700/Del/2009, in respect of assessment year 2005-06. The facts of the case are that the respondent, i.e. assessee- company is engaged in manufacture of thermocol packing/ duplex cartons and corrugated boxes. For the assessment year 2005-06, the -2- assessee filed return of income declaring total income of Rs. NIL. The return was taken up for scrutiny. The assessment was completed under Section 143(3) of the Act vide order dated 3

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