CIT-II LUDHIANA vs. M/S HERO CYCLES LTD.

ITA/157/2010HC Punjab & HaryanaPHHC01093061201023 July 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that the learned counsel for the Revenue fairly stated that the issues raised in the present appeal were covered against the Revenue by a previous order of the same High Court. This order was passed on November 4, 2009, in the case of the assessee, M/s Hero Cycles Limited, in ITA No. 331 of 2009 (CIT II v. M/s Hero Cycles Limited) for Assessment Year 2004-05. Therefore, following its own precedent, the High Court dismissed the Revenue's appeal. The specific reasoning of the ITAT for deleting the disallowance under Section 14A, as challenged by the Revenue, was not re-examined by the High Court due to the binding precedent. No issue was left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax II, Ludhiana, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated February 20, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh. The appeal pertains to Assessment Year 2005-06 and challenges the ITAT's deletion of a disallowance of Rs. 4,05,23,475/- made under Section 14A of the Act. The Assessing Officer had made this disallowance, and the ITAT deleted it. The procedural history involves the Assessing Officer's initial disallowance, the assessee's appeal to the ITAT, the ITAT's decision, and now the Revenue's appeal to the High Court.

What were the issues?

1. Whether on the facts and in law, the Hon’ble ITAT was legally justified in deleting the disallowance of Rs. 4,05,23,475/- under Section 14A of the Income Tax Act, 1961, by ignoring the evidence relied on by the Assessing Officer and the judgment of the Hon’ble Punjab and Haryana High Court in the case of M/s Abhishek Industries Limited (ITA No.110 of 2005)? 2. Whether on the facts and in law, the Hon’ble ITAT was legally justified in deleting the disallowance of Rs. 4,05,23,475/- under Section 14A of the Income Tax Act, 1961, by holding that a clear nexus has not been established when there is no such requirement to prove the nexus as per the provisions of law? Revenue's contentions: The Revenue argued that the ITAT was not justified in deleting the disallowance under Section 14A, alleging that the ITAT ignored the Assessing Officer's evidence and a High Court judgment. The Revenue also contended that the ITAT wrongly held that a nexus was not established, asserting that such a nexus is not a legal requirement under the law. Assessee's contentions: The judgment records no specific contentions for the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 14A

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 23.7.2010 Commissioner of Income Tax II, Ludhiana -----Appellant Vs. M/s Hero Cycles Limited, Ludhiana ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE RAJESH BINDAL Present:- Mr. Vivek Sethi, Advocate for the revenue. Adarsh Kumar Goel,J. This appeal has been filed by the revenue under section 260A of the Income Tax Act, 1961 against order dated 20.2.2009 passed by the Income Tax Appellate Tribunal, Chandigarh, in ITA No.899/Chad/2008, for assessment year 2005-06, proposing to raise following substantial questions of law:- “i) Whether on the facts and in law, the Hon’ble ITAT was legally justified in deleting the disallowance of Rs.4,05,23,475/- under section 14A of the Income Tax Act, 1961 by ignoring the evidence relied on by the Assessing Officer and the judgment of Hon’ble Punjab and Haryana Court in the case of M/s Abhishek Industries Limited in ITA No.110 of 2005? ii) Whether on the facts and in law, the Hon’ble ITAT was legally justified in deleting the disallowance of Rs.4,05,23,475/- under section 14A of the Income Tax Act,

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