THE COMMR. OF INCOME TAX vs. M/S HRY. STATE COOP SUPPLY AND MARKETING

ITA/273/2006HC Punjab & HaryanaPHHC01074969200620 September 2007Author: MR. JUSTICE M.M. KUMAR,MR. JUSTICE AJAY KUMAR MITTAL5 pages
AI SummaryDismissed

What were the facts?

The Revenue, Commissioner of Income-tax, Panchkula, filed an appeal under Section 260A of the Income-tax Act, 1961, against an order dated 3.11.2004 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'A'. The appeal pertained to assessment year 1991-92 and concerned the assessee, M/s Haryana State Co-operative Supply & Marketing Federation Limited. The ITAT had upheld the order of the Commissioner of Income-tax (Appeals) [CIT(A)] on two main issues. The procedural history indicates that the ITAT's order was challenged before the High Court, which heard arguments from both the appellant-revenue and the respondent-assessee.

What did the High Court hold?

The High Court decided both issues against the revenue. Regarding the second issue concerning interest under Section 234B, the Court followed its own Division Bench judgment in Commissioner of Income-tax, Panchkula v. M/s Haryana Warehousing Corporation. The Court held that Section 234B can only be invoked if the assessee is liable to pay advance tax. Since the Assessing Officer had assessed the assessee's income at 'nil' originally, the assessee was not liable to pay advance tax, making the invocation of Section 234B impermissible. The Court also noted that the assessee had acted bonafide based on High Court decisions, and the subsequent reversal by the Supreme Court did not automatically create a liability to pay advance tax. For the first issue concerning depreciation, the Court noted that the revenue had not filed an appeal against a separate order dated 9.8.2005 by the ITAT concerning the same assessment year and the same issue. This order had upheld the CIT(A)'s view that in reassessment proceedings under Section 147, the revenue is bound to consider permissible deductions against income sought to be assessed, even if not claimed originally, relying on CIT v. Sun Engineering Works Pvt. Ltd. The High Court therefore answered the first question against the revenue as well.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether, in the facts and circumstances, the ITAT was correct in law in allowing the assessee's claim for increased depreciation during reassessment proceedings, even though it was not originally claimed? 2. Whether, in the facts and circumstances, the ITAT was correct in upholding the CIT(A)'s deletion of interest charged under Section 234B of the Act, despite the levy being mandatory? The assessee contended that they were not liable to pay advance tax as their income was assessed at 'nil' originally, and therefore, Section 234B could not be invoked. They also argued that the depreciation claim was not considered in original assessment as their entire income was claimed as exempt, and when reassessment proceedings were initiated, the revenue was bound to consider permissible deductions. The revenue argued that the levy of interest under Section 234B is mandatory and that a claim not made in original assessment cannot be raised in reassessment proceedings.

Which sections of the Income-tax Act were involved?

Section 260A,Section 234B,Section 210,Section 234C,Section 147,Section 10(29)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 20.9.2007 The Commissioner of Income-tax, Panchkula …Appellant Versus M/s Haryana State Co-operative Supply & Marketing Federation Limited. …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present: Mr. Yogesh Putney, Advocate, for the appellant-revenue.

Mr. M.L. Garg, Advocate, for the respondent-assessee. M.M. KUMAR, J.

This is revenue’s appeal under Section 260A of the Income-tax Act, 1961 (for brevity, ‘the Act’), against order dated 3.11.2004, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (for brevity, ‘the Tribunal), in I.T.A. No. 617/Chandi/2000, in respect of assessment year 1991-92. The revenue has claimed that the following substantial questions of law would arise for determination of this Court:- (i)

Whether in the facts and circumstances of the case, the ITAT was right in law in upholding the order of the CIT (A) for considering the assessee’s claim of increased depreciation at the stage of re- assessment proceedings while the same had not been claimed originally? (ii)

Whether in t

The order continues below.

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