THE COMMR.OF INCOME TAX-III LDH. vs. M/S NAHAR SPINNING MILLS LTD.

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ITA/426/2006HC Punjab & HaryanaPHHC01075146200628 July 2014Author: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE ASHUTOSH MOHUNTA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court noted that the learned counsel for the parties were in agreement that the issue in the present appeals stood concluded by a previous decision of the High Court dated 6.3.2014 in ITA No.98 of 2008, in the case of the assessee (Commissioner of Income Tax III, Ludhiana v M/s Nahar Spinning Mills Limited, Ludhiana). Consequently, the High Court disposed of the present appeals in the same terms as the aforementioned decision. The specific reasoning of the High Court in the cited case regarding the exclusion of service charges from turnover for Section 80HHC computation is not detailed in this judgment, but the outcome was to follow that precedent. The operative direction was to dispose of the appeals in terms of the earlier judgment.

What were the facts?

The revenue, Commissioner of Income Tax III, Ludhiana, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 24.10.2005 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT's order, in MA No. 180/Chandi/2005 arising from ITA No. 1026/Chandi/1998, pertained to the assessment year 1995-96. The assessee, M/s Nahar Spinning Mills Limited, a manufacturer and exporter, had its assessment framed at an income of ` 14,46,36,553/-. The Assistant Commissioner had included service charges of ` 7,38,90,128/- in the total turnover for computing deduction under Section 80HHC. The assessee's appeal to the CIT(A) was dismissed, but the ITAT partly allowed it. Subsequently, the ITAT, in its order dated 24.10.2005, modified its earlier order to hold that these service charges should be excluded from the total turnover for Section 80HHC computation.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that service charges of dyeing and knitting amounting to ` 7,38,90,128/- should be excluded from the total turnover of the assessee while computing deduction under Section 80HHC of the Income Tax Act, 1961. Assessee's contentions: The assessee argued that the service charges for dyeing and knitting should be excluded from the total turnover for the purpose of computing deduction under Section 80HHC. The ITAT, in its order dated 24.10.2005, accepted this contention. Revenue's contentions: The revenue contended that the ITAT was not right in law in excluding the service charges from the total turnover for the computation of deduction under Section 80HHC. The revenue has filed the present appeal against this decision.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 28.7.2014 Commissioner of Income Tax III, Ludhiana ……Appellant Vs. M/s Nahar Spinning Mills Limited, 373, IAA, Ludhiana …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE JASPAL SINGH Present: Mr. Sanjay Bansal, Sr. Advocate with Ms. Rajni Pal, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA Nos.426 and 428 of 2006 as according to the learned counsel for the parties, the substantial question of law raised in both the appeals is identical. However, the facts are being extracted from ITA No.426 of 2006. 2. ITA No.426 of 2006 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 24.10.2005, Annexure 3 passed by Income Tax Appellate Tribunal, Chandigarh Bench, ‘A’(in short, “the Tribunal') in M.A.No.180/Chandi/2005 arising out of ITA No.1026/Chandi/1998 for the GURBAX SINGH 2014.08.06 13:31 I attest to the accuracy and integrity of this document High Court Chandigarh assessment year 1995-96 claiming following substantial question of law:- “Whether on the facts and the circumstances of the case, the Hon’ble ITAT was right in law in holding that service charges of dyeing and knitting amounting to ` 7,38,90,128/- be excluded from the total turnover of the assessee while computing deduction under section 80HHC?

3.

A few facts relevant for the decision of the controversy involved as narrated in ITA No.426 of 2006 may be noticed. The respondent is a limited company. It filed its return of income for the assessment year 1995-96 showing income of ` 14,41,02,270/-. The assessee is a manufacturer and exporter of cotton yarn, woolen hosiery garments and also trades in cotton yarn. The assessment was framed by the Assistant Commissioner of Income Tax, Central Circle V, Ludhiana on 17.3.1998, Annexure 1 at income of ` 14,46,36,553/-. Deduction under section 80HHC of the Act was reduced as service charges to the tune of `7,38,90,128/- were included in the total turnover for the computation of deduction under Section 80HHC of the Act. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 24.8.1998, Annexure A.2, the CIT(A) dismissed the appeal. The assessee filed further appeal before the Tribunal. Vide order dated 29.4.2005, Annexure 4, the Tribunal partly allowed the appeal. Feeling aggrieved, the assessee filed miscellaneous application before the Tribunal. Vide order 24.10.2005, Annexure 3, the Tribunal modified the order dated 29.4.2005 holding that service charges amounting to ` 7,38,90,128/- be excluded from the total turnover for the purpose of computing deduction under Section 80HHC of the Act. Hence the instant appeals by the revenue.

4.

Learned counsel for the parties are ad idem that the issue herein GURBAX SINGH 2014.08.06 13:31 I attest to the accuracy and integrity of this document High Court Chandigarh stands concluded by the decision of this Court dated 6.3.2014 in ITA No.98 of 2008 in the case of the assessee (Commissioner of Income Tax III, Ludhiana v M/s Nahar Spinning Mills Limited, Ludhiana).

5.

In view of the above, the appeals are disposed of in the same terms as in ITA No.98 of 2008. (Ajay Kumar Mittal) Judge July 28, 2014 (Jaspal Singh) Judge ‘gs’ GURBAX SINGH 2014.08.06 13:31 I attest to the accuracy and integrity of this document High Court Chandigarh

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