COMMISSIONER OF INCOME TAX vs. M/S LIBERTY ENTERPRISES

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ITA/321/2008HC Punjab & HaryanaPHHC01080301200811 July 2008Author: MR. JUSTICE SATISH KUMAR MITTAL,MR. JUSTICE AUGUSTINE GEORGE MASIH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law raised by the Revenue had already been answered by this Court against the Revenue and in favour of the assessee. This was based on the concession made by the counsel for the Revenue that similar appeals concerning the assessee's sister concern, raising the same issue, had been dismissed by the High Court. Therefore, the substantial question of law was answered in the affirmative, meaning in favour of the assessee and against the Revenue. The appeal filed by the Revenue was accordingly dismissed. The operative direction was the dismissal of the appeal.

What were the facts?

The assessee, M/s Liberty Enterprises, is a limited company engaged in the manufacture and sale of footwear and shoe uppers. For the assessment year 1999-2000, the Assessing Officer (AO) treated an expenditure of Rs. 63,000/- on Glow Sign Boards as capital in nature and added it to the assessee's declared income. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal, treating the expenditure as revenue. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal, following its earlier decisions in the assessee's own case and that of its sister concern. The Revenue then filed an appeal before the High Court of Punjab and Haryana at Chandigarh.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in confirming the order of the CIT(A) that expenses of Rs. 63,000/- incurred on glow sign boards were of revenue nature? (Mixed question of law and fact, concerning the nature of expenditure under Section 37 of the Income Tax Act, 1961). Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. However, the CIT(A) and ITAT had allowed the deduction, implying the assessee argued the expenditure was revenue in nature. Revenue's Contention: The Revenue argued that the expenditure on Glow Sign Boards was of a capital nature. However, the counsel for the Revenue fairly conceded that this Court had previously dismissed ten appeals filed by the Revenue against the assessee's sister concern, M/s Liberty Group Marketing Division, Karnal, on a similar substantial question of law by a common judgment dated April 22, 2008.

Which sections of the Income-tax Act were involved?

Section 260A,Section 37

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 321 of 2008 DATE OF DECISION : 11.07.2008 Commissioner of Income Tax (Central), Ludhiana .... APPELLANT Versus M/s Liberty Enterprises, Railway Road, Karnal ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL

HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH

Present: Mr. K.K. Mehta, Advocate, for the appellant-revenue.

* * * SATISH KUMAR MITTAL , J. ( Oral ) The Revenue has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as `the Act'), against the order dated 15.6.2007, passed by the Income Tax Appellate Tribunal, Delhi Bench `E', Delhi, passed in ITA No. 1454/Del/2004 for the assessment year 1999-2000. In the present case, the assessee is a limited company engaged in manufacture and sale of footwears and shoe uppers etc. For the assessment year 1999-2000, the assessee filed its return declaring income of Rs. 6,27,72,090/-. The Assessing Officer treated the expenditure of Rs.63,000/- on Glow Sign Boards as expenditure of capital nature. The -2- Assessing Officer made addition of the same in the income and completed the assessment at an income of Rs. 6,71,70,900/-. Aggrieved by the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)-I, Ludhiana, who vide his order dated 5.12.2003, following the orders of the ITAT passed in ITA No. 3768/Del/90 and 7147 & 7148/Del/90 in assessee's own case, allowed the appeal of the assessee, while allowing the deduction, as claimed. Not satisfied with the said order, the Revenue filed an appeal before the Income Tax Appellate Tribunal, who vide its order dated 15.6.2007, following its earlier decision in case of the assessee and in case of its sister concern dismissed the appeal. Against the said order, the instant appeal has been filed by the Revenue raising the following substantial question of law : “Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in confirming the order of the CIT (A) that expenses of Rs. 63,000/- incurred on glow sign Boards were of revenue nature?” Counsel for the Revenue has fairly conceded that in case of the sister concern of the assessee M/s Liberty Group Marketing Division, Karnal, ten appeals (ITAs No. 9 of 2002, 79, 200, 201 of 2005, 159, 160 of 2006, 452, 453, 527 and 528 of 2007), filed by the Revenue, raising the similar substantial question of law, have been dismissed by this Court, by a common judgment dated April 22, 2008. -3- Since the aforesaid substantial question of law has already been answered by this Court against the Revenue and in favour of the assessee, therefore, the substantial question of law raised by the Revenue is answered in affirmative i.e. against the Revenue and in favour of the assessee and the appeal is, accordingly, dismissed.

( SATISH KUMAR MITTAL ) JUDGE July 11, 2008 ( AUGUSTINE GEORGE MASIH ) ndj JUDGE

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