C.I.T.,JDR. vs. M/S THE NAKODAR COOP.SUGAR MILLS LTD.

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ITA/128/2002HC Punjab & HaryanaPHHC01047221200217 December 2007Author: MR JUSTICE RAKESH KUMAR JAIN,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions of law raised in the appeals were no longer res integra, having been answered by the Hon'ble Supreme Court in the case of United Commercial Bank v. Commissioner of Income-Tax, (1999) 240 ITR 355 (S.C.). Following the principle laid down in that judgment, the High Court answered the questions of law against the revenue and in favour of the assessee. The operative directions from the ITAT, which were upheld, included directing the Assessing Officer not to include depreciation in the valuation of closing stock and to reconsider the issue of disallowance of Rs. 1,22,64,257/-. The specific reasoning of the Supreme Court judgment that covered these issues was not detailed in this High Court order, but it formed the basis for the decision. No issue was expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax, Jalandhar-II, filed two appeals (ITA Nos. 128 and 126 of 2002) against a common order dated 24.12.2001 passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The ITAT's order pertained to appeals filed by the assessee, M/s The Nakodar Co-op. Sugar Mills Ltd., for assessment years 1998-99 and 1996-97. The appeals challenged the ITAT's directions regarding the inclusion of depreciation in the valuation of closing stock and the reconsideration of a disallowance of Rs. 1,22,64,257/-. The High Court was seized of these appeals under Section 260A of the Income-tax Act, 1961.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the Tribunal was justified in directing the Assessing Officer not to include depreciation while calculating the valuation of the closing stock when the closing stock was not being valued on the direct cost method in the accounting year relevant to Assessment Year 1995-96? 2. Whether the Tribunal was justified in directing the Assessing Officer to reconsider the issue of disallowance of Rs. 1,22,64,257/- although there was no such dispute before the CIT (A)? The revenue contended that the Tribunal erred in its directions on both counts. The assessee's contentions were not explicitly recorded in the judgment, but the Tribunal's decision was in their favour. The High Court noted that the matter was covered by a Supreme Court judgment.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 128 of 2002 Date of Decision: 17.12.2007 Commissioner of Income Tax, Jalandhar-II, Jalandhar …Appellant Versus M/s The Nakodar Co-op. Sugar Mills Ltd., Nakodar …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE RAKESH KUMAR JAIN Present: Mr. Sanjeev Bansal, Advocate, for the appellant-revenue. M.M. KUMAR, J. This order shall dispose of I.T.A. Nos. 128 and 126 of 2002, which have been filed by the revenue under Section 260A of the Income-tax Act, 1961 (for brevity, ‘the Act’), challenging common order dated 24.12.2001, passed by the Income Tax Appellate Tribunal, Amritsar Bench , Amritsar (for brevity, ‘the Tribunal’), in I.T.A. Nos. 209(ASR) 2001 and I.T.A. No. 111(ASR) 1999, in respect of assessment years 1998-99 and 1996-97 respectively. It is claimed that following substantial questions of law would emerge for determination of this Court:-

1.

Whether the Tribunal was justified in directing the Assessing Officer not to include depreciation

I.T.A. No. 128 of 2002 while calculating the valuation of the closing stock when the closing stock was not being valued on direct cost method in the accounting year relevant to Assessment Year 1995-96?

2.

Whether the Tribunal was justified in directing the Assessing Officer to reconsider the issue of disallowance of Rs. 1,22,64,257/- although there was no such dispute before the CIT (A)? After hearing learned counsel for the appellant-revenue and perusing the record we find that the matter is no longer res integra. Hon’ble the Supreme Court in the case of United Commercial Bank v. Commissioner of Income-Tax, (1999) 240 ITR 355 (S.C.), has already answered the questions of law against the revenue and in favour of the assessee. In view of above, following the same principle the questions of law raised in the instant appeals are answered against the revenue and in favour of the assessee being squarely covered by the judgment of Hon’ble the Court in the case of United Commercial Bank (supra). (M.M. KUMAR) JUDGE (RAKESH KUMAR JAIN) December 17, 2007 JUDGE Pkapoor 2

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