CIT, HISAR vs. M/S PARKASH INDUSTRIES LTD. SRIVAN

ITA/73/2010HC Punjab & HaryanaPHHC01093695201016 February 2010Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE JITENDRA CHAUHAN6 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s. Prakash Industries Ltd., filed its return for assessment year 1994-95 declaring a loss and claiming a deduction under Section 35AB for imported technical know-how. The Assessing Officer allowed a partial deduction under Section 35AB and depreciation on block assets after reducing a specific amount. The CIT(A) allowed deduction under Section 35AB on the amount paid to foreign collaborators but set aside the depreciation claim pending verification. The revenue appealed to the Tribunal on depreciation. Subsequently, the Assessing Officer disallowed depreciation on TDS paid to the Central Government as it was refunded. The CIT(A) held no depreciation was allowable on TDS and allowed depreciation on a lesser amount than previously granted. A rectification application led the CIT(A) to hold depreciation was allowable on TDS and deduction under Section 35AB on the full amount paid to foreign collaborators. The Tribunal, on further appeal, held the assessee was not entitled to depreciation on a certain amount but was entitled to deduction under Section 35AB and that the block of assets should be increased by a specific amount for depreciation computation. The revenue did not challenge this Tribunal order.

What did the High Court hold?

The High Court held that the appeal filed by the Revenue was liable to be dismissed. Firstly, it was held that the Tribunal's finding that a previous order for assessment year 1995-96 had attained finality was unassailable, invoking the principle of consistency as established by the Supreme Court in cases like Radhasoami Satsang v. CIT. Therefore, the Revenue was not permitted to challenge a similar finding and deviate from its earlier stand. Secondly, the Court held that the question of law sought to be raised by the Revenue did not emerge from the order of the Tribunal, as no argument on that specific issue was raised before the Tribunal. Reliance was placed on CIT v. Scindia Steam Navigation Co. Ltd. and Echo Shella v. CIT. The Court noted that there was no challenge to the Tribunal's findings of fact regarding the increase in the value of block assets for depreciation computation. Consequently, the appeal was dismissed. The Court also noted that a similar issue for assessment year 1993-94 was decided in favour of the assessee.

What were the issues?

1. Whether the Revenue is barred from challenging a similar finding as an earlier order of the Tribunal for assessment year 1995-96 had attained finality, and if the principle of consistency applies. - Assessee: Relied on the principle of consistency as laid down in various Supreme Court judgments, including Radhasoami Satsang v. CIT, Berger Paints India Ltd. v. CIT, CIT v. J.K. Charitable Trust, and C.K. Gangadharan v. C.I.T. Argued that once a similar proposition was accepted by the revenue and the order attained finality, the revenue cannot deviate from its earlier stand. - Revenue: Did not record any specific arguments on this point. 2. Whether a question of law sought to be raised by the Revenue emerges from the order of the Tribunal, especially when the issue was not raised before the Tribunal. - Assessee: Relied on Supreme Court judgments in CIT v. Scindia Steam Navigation Co. Ltd. and a Punjab & Haryana High Court judgment in Echo Shella v. CIT. Argued that a question of law not raised before the Tribunal nor considered by it cannot be deemed to have emerged from its order. - Revenue: Did not record any specific arguments on this point. 3. Whether the assessee is entitled to deduction under Section 35AB and an increase in the value of block assets for depreciation computation. - Assessee: The judgment implies the assessee argued for these deductions and the increase in block assets, as the Tribunal's findings in their favor are discussed. - Revenue: The judgment indicates the revenue's contention was that the assessee was not entitled to depreciation on the gross value of block assets after certain deductions, and that the value of block assets should be increased by a specific amount for depreciation computation.

Which sections of the Income-tax Act were involved?

Section 35AB,Section 32,Section 201,Section 154,Section 260A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: February 16, 2010

Commissioner of Income-tax, Hisar ----Appellant Versus M/s. Prakash Industries Ltd. ---Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. Sanjeev Kaushik, Sr. Standing Panel Counsel for Direct Taxes.

1.

To be referred to the Reporters or not?

2.

Whether the judgment should be reported in the Digest? **** M.M. KUMAR, J. This is an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for brevity 'the Act') challenging order dated 18.06.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench 'D', New Delhi (for brevity 'the Tribunal) in I.T.A. No. 4610/Del./05 in respect of the assessment year 1994-95. Facts: On 30.11.1994 the assessee-respondent filed its return of income declaring a loss of Rs. 58,56,48,200/-. A deduction under Section 35AB was claimed at Rs. 1,30,68,020/- i.e., 1/6th of Rs. 7,84,08,120/-. The deduction was claimed on account of the fact that assessee had imported technical know-how for which payment of Income Ta

The order continues below.

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