COMMISSIONER OF INCOME TAX vs. M/S H P COTTON TEXTILES MILLS LTD.

ITA/264/2007HC Punjab & HaryanaPHHC01072951200702 August 2007Author: MR. JUSTICE M.M. KUMAR4 pages
AI SummaryDismissed

What were the facts?

The Revenue (Commissioner of Income Tax, Hissar) appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated August 18, 2006, for Assessment Year 1994-1995. The ITAT had upheld the Commissioner (Appeals) order allowing a deduction under Section 80-I of the Income Tax Act, 1961, to the assessee, M/s H.P. Cotton Textile Mills Ltd. The Assessing Officer (AO) had disallowed the deduction, relying on a previous order under Section 263 by the Commissioner which stated that Assessment Year 1986-87 was the first year of production. However, this Section 263 order was later cancelled by the ITAT on technical and merits grounds, holding that 1986-87 was not the first year of production, but only trial production. The ITAT followed the Delhi High Court's decision in CIT v. Food Specialities Limited, emphasizing commercial production.

What did the High Court hold?

The High Court held that no substantial question of law arose for determination. The Court reasoned that once the Commissioner's order under Section 263, which was in favor of the Revenue, was reversed by the ITAT, the Revenue could not subsequently argue for a different calculation of the eight-year period for Section 80-I benefits. The Court invoked the principle of consistency, citing the Supreme Court's decisions in Radha Swami Satsang v. CIT and Berger Paints India Ltd. v. CIT. The Court noted that the ITAT's order dated November 28, 2002, which held that the assessee had not commenced production in 1986-87, had attained finality as the Revenue had not challenged it further. Therefore, the High Court found no infirmity in the ITAT's decision and dismissed the Revenue's appeal.

What were the issues?

1. Whether the Hon'ble ITAT was right in dismissing the Revenue's appeal upholding the order of the Ld. CIT (Appeals) allowing deduction U/s 80-I of the Income Tax without appreciating that such deduction was claimed beyond the period of eight years, in contravention of Section 80-I(5) of the Act. Assessee's contentions: The assessee argued that the Commissioner's order under Section 263, which had determined 1986-87 as the first year of production, was cancelled by the ITAT. The ITAT had held that only trial production commenced in 1986-87 and commercial production had not started. This finding by the AO that 1986-87 was not the first year of production had become final. The assessee relied on the ITAT's order dated November 28, 2002, in ITA No.1592/Del/01 and the Delhi High Court's decision in CIT v. Food Specialities Limited. Revenue's contentions: The Revenue contended that the deduction under Section 80-I was claimed beyond the prescribed eight-year period, violating Section 80-I(5) of the Act. They argued that the ITAT failed to appreciate this fact when upholding the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 80-I,Section 263,Section 260A,Section 80-HH

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.264 of 2007 Date of decision:2.8.2007 Commissioner of Income Tax, Hissar ......Appellant Versus M/s H.P. Cotton Textile Mills Ltd.Hissar ......Respondent CORAM:- Hon'ble Mr. Justice M.M. Kumar Hon'ble Mr. Justice Ajay Kumar Mittal * * * Present: Mr. Yogesh Putney, Advocate for the revenue. * * *

Order M.M.Kumar, J The Revenue has filed the instant appeal under Section 260A of the Income Tax Act, 1961 (for brevity 'the Act') challenging order dated 18.8.2006 passed by the Income Tax Appellate Tribunal,'C' Bench, New Delhi (for brevity 'the ITAT') in ITA No.3084/Del/2003 in respect of Assessment Year 1994-1995.

On the basis of order passed by the Commissioner under Section 263 in respect of Assessment Year 1996-97, the Assessing Officer did not accept the claim made by the assessee-respondent holding that the Commissioner had held in his order under Section 263 that the year 1986- 87 was the first year of production. Therefore, deduction under Section 80 I of the Act for the Assessment Year 1994-95 was not available as it was only for a period of 8 years which had expired. However, on further appeal filed by th

The order continues below.

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