M/S F M W EXPORTS vs. C I T

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ITA/344/2007HC Punjab & HaryanaPHHC01073040200711 October 2007Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE M.M. KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for determination. The Court referred to its own prior decision in M/s Arisudana Spinning Mills Ltd. v. CIT (dated 31.7.2007), which dealt with similar questions of law. The High Court found that the ITAT had rightly allowed the revenue's appeal by following the law laid down by the Supreme Court in CIT v. Sterling Foods, (1999) 237 ITR 579. This precedent was considered fully applicable to the present case. Therefore, the High Court found no ground to interfere with the ITAT's view. The appeal was dismissed as wholly without merit. No issue was expressly left undecided.

What were the facts?

The assessee, M/s F.M.W. Exports, filed an appeal under Section 260A of the Income-tax Act, 1961, against an order dated 17.5.2007 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Branch 'A'. The appeal pertained to assessment year 2001-02. The ITAT had passed the order in I.T.A. No. 815/Chandi/2006. The dispute revolved around the assessee's eligibility for deduction under Section 80-IB of the Act in respect of profits and gains arising from duty drawback and DFRC premium. The High Court was considering whether substantial questions of law arose from the ITAT's decision.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the ITAT was justified in holding that the appellant was not entitled to deduction under Section 80-IB in respect of profits and gains arising from duty drawback and DFRC premium, which are intrinsically related to the business profits of the industrial undertaking. 2. Whether the ITAT was justified in denying the claims under Section 80-IB by relying on judgments in Liberty India and other distinguishable cases. 3. Whether the ITAT's findings were perverse and against the evidence on record, making them unsustainable in law. 4. Whether the ITAT misdirected itself by being influenced by irrelevant factors and applying erroneous criteria while deciding the eligibility for deduction under Section 80-IB. The assessee contended that the duty drawback and DFRC premium were intrinsically related to the business profits and that the ITAT had wrongly relied on distinguishable judgments. The revenue's contentions are not explicitly recorded in the judgment, but the High Court's decision implies that the revenue's position, as upheld by the ITAT, was that these amounts were not eligible for deduction under Section 80-IB.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80-IB

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 11.10.2007 M/s F.M.W. Exports …Appellant Versus C.I.T., Ludhiana …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present: Mr. Rajiv Sharma, Advocate, for Mr. S.K. Mukhi, Advocate, for the appellant-assessee. M.M. KUMAR, J.

This is assessee’s appeal under Section 260A of the Income-tax Act, 1961 (for brevity, ‘the Act’), against order dated 17.5.2007, passed by the Income Tax Appellate Tribunal, Chandigarh Branch ‘A’, Chandigarh (for brevity, ‘the Tribunal), in I.T.A. No. 815/Chandi/2006, in respect of assessment year 2001-02. It is claimed that the following substantial questions of law would arise for determination of this Court:- I.

Whether, on the facts and circumstances of the case, the ITAT was justified in law to hold that appellant was not entitled to the deduction u/s 80- IB in respect of profits and gains arising on account of duty drawback and DFRC Premium which is intrinsically related/connected to the business profits of the industrial undertaking? II.

Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified in denying the claims of the appellant u/s 80IB of the Income Tax Act, 1961 by blindly relying upon the judgment of this Court in the case of Liberty India and other judgments which are distinguishable on facts itself? III.

Whether, on the facts and circumstances of the case, the findings of ITAT are perverse and against the evidences on record, thus, unsustainable in law? IV.

Whether the ITAT has mi irected itself in being influenced by irrelevant factors and applying erroneous criteria while deciding the issue of eligibility for claiming deduction under Section 80IB of the Income-tax Act, 1961? After hearing learned counsel for the assessee-appellant and perusing the record, we are of the considered view that no question of law, much less a substantive question of law warranting admission of the appeal would arise, inasmuch as, the matter is no longer res integra. We have already rejected appeals bearing I.T.A.

Nos. 278 and 279 of 2007 in the case of M/s Arisudana Spinning Mills Ltd. v. CIT, decided on 31.7.2007, wherein similar questions of law were raised. The Tribunal has rightly allowed the appeal filed by the revenue by following the law laid down by Hon’ble the Supreme Court in the case of CIT v. Sterling Foods, (1999) 237 ITR 579, which is fully applicable to the instant appeal. Therefore, we do not find any ground to interfere with the view taken by the Tribunal.

In view of the above, this appeal is wholly without merit.

Dismissed. (M.M. KUMAR) JUDGE (AJAY KUMAR MITTAL)

October 11, 2007 JUDGE Pkapoor 3

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