CIT, CHANDIGARH vs. M/S MILK SPECIALISTS LTD.

ITA/881/2008HC Punjab & HaryanaPHHC01080918200808 September 2014Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE DR. RAVI RANJAN4 pages
AI SummaryRemanded

What were the facts?

The Revenue (Commissioner of Income Tax (TDS), Chandigarh) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 21.5.2008 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT's order pertained to assessment year 2005-06. The dispute arose from an inspection on 4.1.2007, which led the Assessing Officer (AO) to pass an order under Sections 201 and 201(A) read with Section 194C of the Act, creating a demand of ₹7,94,540, including interest. The assessee, M/s Milk Specialties Ltd., appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the appeal, holding that the purchase of packing material was a sale of goods, not a works contract. The Revenue appealed to the ITAT, which dismissed the Revenue's appeal. The High Court is now considering the Revenue's appeal against the ITAT's order.

What did the High Court hold?

The High Court found that neither the CIT(A) nor the Tribunal had referred to any material on the basis of which it could be concluded that the transaction was a contract for sale and not a works contract. In the absence of clear findings based on the available material, the Court deemed it appropriate to remit the matter back to the Assessing Officer. The AO is to examine the factual aspect of the case afresh and decide it in accordance with the law, after providing an opportunity of hearing to the assessee. The substantial question of law is answered accordingly. The orders of the CIT(A) and the Tribunal are set aside. No specific issue was left undecided, but the determination of the nature of the contract was deferred to the AO.

What were the issues?

1. Whether the transaction involving the supply of packing material by a contractor to the assessee constitutes a works contract attracting the provisions of Section 194C of the Income Tax Act, 1961, or a sale of goods. Assessee's Arguments: The assessee's counsel supported the order passed by the Tribunal. Revenue's Arguments: The Revenue contended that the CIT(A) and the Tribunal erred in holding that the transaction was a sale of goods, thereby not attracting Section 194C. The Revenue argued that the assessee supplied packing material to the contractor for printing, and the contractor returned the printed material, thus constituting a works contract. The Revenue further argued that the assessee did not appear before the AO or produce material to substantiate its claim, and the Tribunal relied on findings from another case without examining material specific to the assessee's case.

Which sections of the Income-tax Act were involved?

Section 260A,Section 201,Section 201(A),Section 194C

AI-generated summary — verify with the full judgment below

ITA No. 881 of 2008 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 881 of 2008 (O&M) Date of Decision: 8.9.2014 Commissioner of Income Tax (TDS), Chandigarh ....Appellant. Versus M/s Milk Specialties Ltd., Chandigarh ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE FATEH DEEP SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J.

1.

This order shall dispose of two appeals bearing ITA Nos. 881 and 773 of 2008 as according to the learned counsel for the parties, the issue involved therein is identical. For brevity, the facts are being taken from ITA No. 881 of 2008. 2. ITA No. 881 of 2008 has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 21.5.2008 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh, in ITA No. 131/Chandi/2008, for the assessment year 2005-06 (Financial Year 2004-05). The appeal was admitted by this Court vide order dated 14.7.2009 for determination of the substantial question of law formulated in the order dated 19

The order continues below.

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