C I T vs. M/S PUNJAB STATE WAREHOUSING CORP.

ITA/826/2008HC Punjab & HaryanaPHHC01080857200810 September 2014Author: MR. JUSTICE DR. RAVI RANJAN,MR. JUSTICE SURINDER GUPTA8 pages
AI SummaryRemanded

What were the facts?

The assessee, M/s Punjab State Warehousing Corporation Limited, is engaged in letting out godowns and procurement of food grains. For assessment year 2000-01, it filed a return declaring income of ₹90,000, which was processed, and a refund of ₹45,68,111 was issued. The Assessing Officer (AO) computed taxable income by apportioning expenses between warehousing and other activities, following the judgment in Orissa State Warehousing Corporation vs. CIT. The Commissioner of Income Tax (Appeals) deleted the addition, stating that reopening under Section 147 was bad in law due to the proviso to Section 14A. The Tribunal dismissed the revenue's appeal. The revenue appealed to the High Court against the Tribunal's order dated 10.1.2008.

What did the High Court hold?

The High Court noted that it was not disputed that reassessment proceedings were initiated under Section 147, but not on account of Section 14A. The Court referred to its own previous judgment in CIT vs. M/s Punjab State Warehousing Corporation Limited (ITA No.848 of 2008, decided on 3.10.2013). In that judgment, the Court had held that Section 14A, inserted retrospectively from 1.4.1962, was applicable. However, the proviso to Section 14A, added by the Finance Act, 2002, with effect from 11.5.2001, stated that the AO could not reopen assessments under Section 147 for any assessment year beginning on or before 1.4.2001. The Court observed that in the present case, the assessment orders were passed under Section 143(3), not under Section 147 or 154. Therefore, the proviso to Section 14A was not attracted. The Court set aside the Tribunal's order and remanded the matter back to the Tribunal to decide it afresh in accordance with law after hearing the parties.

What were the issues?

1. Whether Section 14A of the Income Tax Act, 1961, inserted retrospectively from 1.4.1962 by the Finance Act, 2001, was operational from 1.4.2001? (Question of law) 2. Whether the ITAT was right in holding that the AO was not empowered to invoke Section 14A in proceedings under Section 147, despite the proviso to Section 14A, when the return was processed under Section 143(1) and no assessment was made? (Question of mixed law and fact) 3. Whether the ITAT was right in adjudicating an issue already addressed by an earlier ITAT order dated 5.3.2004, which was passed after the insertion of the proviso to Section 14A? (Question of law) Assessee's contentions: The assessee argued that its income from activities other than warehousing, including procurement, was exempt under Section 10(29). It also contended that no separate accounts were maintained for warehousing and procurement, making bifurcation of expenses impossible. The assessee further argued that the reopening under Section 147 was bad in law as per the proviso to Section 14A. Revenue's contentions: The revenue argued that the case was reopened under Section 147 because income from interest on advances, supervision charges, hiring charges, miscellaneous income from procurement, and income from CFS were not entitled to deduction under Section 10(29) as they lacked a direct nexus with warehousing activities. The revenue contended that the Tribunal erred in dismissing its appeal.

Which sections of the Income-tax Act were involved?

Section 14A,Section 147,Section 143(3),Section 154,Section 10(29),Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 10.9.2014 The Commissioner of Income Tax I, Chandigarh ……Appellant Vs. M/s Punjab State Warehousing Corporation Limited …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Ms Urvashi Dhugga, Advocate for the appellant. Mr. Ravi Shankar and Mr. B.M.Monga, Advocates for the respondent. Ajay Kumar Mittal,J.

1.

Delay in refiling the appeal is condoned.

2.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 10.1.2008, Annexure A.3 passed by Income Tax Appellate Tribunal, Chandigarh Bench 'B', (in short, “the Tribunal') in ITA No.772/CHANDI/2006 for the assessment year 2000-01, claiming following amended substantial questions of law:- “1. Whether in the facts and circumstances of the case, the ITAT is right in law in holding that Section 14A of the Income Tax Act, 1961 which was inserted by Finance Act, 2001 with retrospective effect from 1.4.1962 was operational from GURBAX SINGH 2014.10.13

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 14A

All 15,814 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →