COMMISSIONER OC INCOME TAX vs. M/S PUNJAB WOOL COMBERS

ITA/6/2004HC Punjab & HaryanaPHHC01051580200409 September 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL5 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed against an order of the Income Tax Appellate Tribunal (ITAT) for assessment year 1992-93. The assessee, M/s. Punjab Wool Combers Ltd., had declared a net income of Rs. 2,87,69,420/-. The Assessing Officer (AO) assessed total income at Rs. 2,98,15,254/-, making various disallowances including Rs. 13,64,370/- under Section 80-I, including CST and ST in turnover for Section 80HHC deduction, Rs. 9,061/- on telephone expenses, and on premium on redemption of debentures. The Commissioner of Income-tax (Appeals) confirmed the AO's order. The ITAT, however, directed adjustments for Section 80-I based on a prior year's decision, excluded CST and ST from turnover for Section 80HHC, deleted the telephone expense addition, and allowed proportionate deduction for debenture redemption premium.

What did the High Court hold?

The High Court answered all three questions against the Revenue. Regarding Question (i), the Tribunal's decision on Section 80-I was upheld, relying on its earlier decision in the assessee's own case for assessment year 1990-91, which was decided against the Revenue. For Question (ii), the Revenue conceded that the issue of excluding CST and ST from total turnover for Section 80HHC deduction was concluded against them by a Division Bench judgment of the High Court in Commissioner of Income Tax v. Avery Cycle Industries Ltd. (2008) 298 ITR 239 (P&H). Concerning Question (iii), the Tribunal's direction to allow proportionate deduction of premium payable on redemption of debentures was upheld by relying on the Apex Court's decision in Madras Industrial Investment Corporation Ltd. v. Commissioner of Income Tax (1997) 225 ITR 802 (SC). The Court found no substantial question of law arising on this point.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the ITAT was justified in reversing the CIT(A)'s order which upheld the AO's action restricting the deduction under Section 80-I from Rs. 83,91,322/- to Rs. 70,26,952/- in light of Section 80-I(8) and (9)? 2. Whether the ITAT was justified in directing the AO to exclude CST and ST from total turnover for Section 80HHC deduction? 3. Whether the ITAT was justified in directing the AO to allow proportionate deduction of premium payable on redemption of debenture? The Revenue argued that the ITAT erred on all three counts. The assessee, through the ITAT's order, contended that the deduction under Section 80-I should be adjusted based on prior year's allowance, CST and ST should be excluded from turnover for Section 80HHC, and proportionate deduction for debenture premium is admissible.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(1)(a),Section 37(4),Section 80HHC,Section 80-I,Section 143(3)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH.

Date of Decision: 9.9.2010 Commissioner of Income-Tax-I, Ludhiana. ...Appellant. Versus M/s. Punjab Wool Combers Ltd., Ludhiana ...Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- PRESENT: Mr. Rajesh Katoch, Advocate for the appellant-Revenue --- 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 10.1.2003, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (in short “the Tribunal”) in Income- tax Appeal No. 1057/CHANDI/96, in respect of assessment year 1992-

93.

Briefly stated the facts of the case are that the respondent- assessee filed return of income for the assessment year 1992-93 declaring net income at Rs. 2,87,69,420/-. The return was processed under Section 143(1)(a) of the Act at an income of Rs. 2,88,83,900/- -2- and during that processing, an adjustment on account of disallowance on rent paid for the Guest House under Section 37(4) and by reduction of 90% in

The order continues below.

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