(O&M) COMMISSIONER OF INCOME TAX,LDH vs. M/SR.S.BUILDERS LTD

ITA/199/2001HC Punjab & HaryanaPHHC01042034200102 July 2014Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE RAJAN GUPTA3 pages
AI SummaryAllowed

What were the facts?

The respondent, M/s R.S. Builders & Engineers Pvt. Limited, an assessee engaged in civil and labour construction, filed its return for assessment year 1989-90. The assessee claimed and was allowed a deduction of ₹2,58,629/- under Section 32AB of the Income Tax Act, 1961. During assessment under Section 143(3), the Assessing Officer disallowed this deduction, holding that civil construction was not an eligible business under Section 32AB(2). The CIT(A) partly allowed the appeal, directing the Assessing Officer to allow the claim based on a CBDT circular. The Tribunal dismissed the revenue's appeal. The revenue has appealed this order to the High Court.

What did the High Court hold?

The High Court held that the issue stood concluded by the judgment of the Apex Court in S.A.Builders' case (supra). In that case, the Apex Court, while affirming the High Court's judgment, had held that an assessee engaged in civil construction was not entitled to deduction under Section 32AB of the Income Tax Act, 1961, as it was not carrying on any manufacturing activity and the claim was not based on facts on record. The deduction under Section 32AB was not automatic and was subject to various conditions which required examination of facts not on record. Therefore, the substantial question of law was answered in favour of the revenue and against the assessee. The appeal was allowed.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee engaged in the business of civil and labour construction was entitled to deduction under Section 32AB of the IT Act, when statute does not permit such allowance? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The assessee was engaged in the business of civil and labour construction and was therefore not entitled to claim deduction under Section 32AB of the Act. The revenue relied on the judgment of this Court in S.A.Builders Limited v. CIT, (2007) 289 ITR 24, which was affirmed by the Apex Court in S.A.Builders v. CIT and another, (2007) 289 ITR 26.

Which sections of the Income-tax Act were involved?

Section 32AB,Section 32AB(2),Section 143(1)(a),Section 143(3),Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision:2.7.2014 Commissioner of Income Tax (Central) Ludhiana …Appellant Vs. M/s R.S.Builders & Engineers Pvt. Limited, Ludhiana …Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE JASPAL SINGH Present: Mr. Rajesh Katoch, Advocate for the appellant. None for the respondent. Ajay Kumar Mittal,J.

1.

This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 against the order dated 31.5.2000, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh in ITA No.1896/Chandi/92, for the assessment year 1989-90, claiming following substantial question of law:- “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee engaged in the business of civil and labour construction was entitled to deduction under Section 32AB of the IT Act, when statute does not permit such allowance?

2.

The facts, in brief, necessary for adjudication of the controversy involved, as narrated in the appeal may be noticed. The respondent is a private limited

The order continues below.

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