HARYANA STATE SMALL INDUTRIES & EXPORT CORPORATION LTD. vs. CIT, PANCHKULA

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ITA/139/2014HC Punjab & HaryanaPHHC01109263201410 July 2014Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE RAJAN GUPTA3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal did not raise any substantial question of law. The Court noted that the assessee's counsel fairly accepted that the issue stood concluded against the assessee in a previous judgment of the High Court dated August 1, 2012, in ITA No. 79 of 2012, which dealt with the same assessee and a similar issue for preceding assessment years. Consequently, finding no merit in the appeal, the High Court dismissed it. The Tribunal's decision to remand the matter to the Assessing Officer for verification of expenditure to earn income from other sources was not disturbed, as the appeal before the High Court was specifically on the disallowance of business expenditure.

What were the facts?

The assessee, M/s Haryana State Small Industries & Export Corporation Ltd., filed its return for assessment year 2009-10 declaring nil income. The assessee had closed its business effective June 30, 2002, but continued to incur expenses related to its liquidation, including employee remuneration, bank loan interest, and selling, administration, and distribution costs, totaling ` 1,32,35,943/-. The Assessing Officer disallowed these expenses, stating no business was undertaken in the current year. The CIT(A) upheld this disallowance, treating the income as from other sources. The Tribunal, following its prior orders, held the income could not be treated as business income and remanded the matter to the Assessing Officer to verify expenditure incurred to earn income from other sources. The assessee appealed this order to the High Court.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal has fallen in error in disallowing the business expenditure incurred by the assessee which is allowable under Sections 30 to 37 of the Income Tax Act? Assessee's contention: The assessee argued that the expenses incurred were business expenditures allowable under Sections 30 to 37 of the Income Tax Act. Revenue's contention: The revenue contended that since the business was closed, the expenses could not be treated as business expenses and the income should be considered as income from other sources. The revenue relied on the Tribunal's order for preceding years and the High Court's judgment in ITA No. 79 of 2012 (M/s Haryana State Small Industries & Export Corporation Ltd. v. The CIT, Panchkula).

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 139 of 2014 (O&M) Date of Decision: 10.7.2014 M/s Haryana State Small Industries & Export Corporation Ltd. ....Appellant Versus The CIT, Panchkula ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE JASPAL SINGH. PRESENT: Ms. Radhika Suri, Senior Advocate with Ms. Rinku Dahiya, Advocate for the appellant. AJAY KUMAR MITTAL, J.

Delay of 73 days in refiling the appeal is condoned.

This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 20.8.2013 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”) for the assessment year 2009-10, claiming the following substantial question of law:- “Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal has fallen in error in disallowing the business expenditure incurred by the assessee which is allowable under Sections 30 to 37 of the Income Tax Act?” Singh Gurbachan 2014.08.04 15:43 I attest to the accuracy and integrity of this document High Court Chandigarh -2-

The facts, in brief, necessary for adjudication of the present appeal as narrated therein may be noticed. The assessee filed its return for the assessment year 2009-10 on 30.9.2009 declaring nil income. It closed its business w.e.f. 30.6.2002, however, the business was under liquidation and for the said purpose, expenses on employees remuneration, interest paid on the bank loans and selling, administration and distribution expenses were being incurred. The assessee claimed an amount of ` 1,32,35,943/- on account of such expenses incurred inclusive of depreciation of ` 174/-. The Assessing Officer vide order dated 28.11.2011 (Annexure A-1) disallowed the above said business expenses as no business was undertaken in the current year. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 18.10.2012 (Annexure A-2) upheld the order of the Assessing Officer and treated the income of the assessee as income from other sources and disallowed business expenses. Still not satisfied, the assessee filed an appeal before the Tribunal who vide order dated 20.8.2013 (Annexure A-3) following its order for the preceding years held that the income earned by assessee could not be treated as business income and with regard to the issue of income from other sources, remanded the matter back to the Assessing Officer for verifying expenditure incurred to earn such income. Hence, the present appeal.

Learned counsel for the appellant very fairly accepted that the issue herein stands concluded against the assessee in the judgment dated 1.8.2012 passed in ITA No. 79 of 2012 (M/s Haryana State Small Industries & Export Corporation Ltd. v. The CIT, Panchkula).

In view of the above, no substantial question of law arises in Singh Gurbachan 2014.08.04 15:43 I attest to the accuracy and integrity of this document High Court Chandigarh -3- this appeal. Finding no merit in the instant appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE July 10, 2014

(JASPAL SINGH) gbs JUDGE Singh Gurbachan 2014.08.04 15:43 I attest to the accuracy and integrity of this document High Court Chandigarh

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