C.I.T. JDR. vs. M/S KASINKA TRADEINGS.
What did the High Court hold?
The High Court held that the question referred to it should be answered in favour of the assessee and against the revenue. The reasoning was based on the Supreme Court's judgment in Kasinka Trading and another v. Union of India and another, AIR 1995 SC 874, which upheld the leviability of customs duty. Consequently, if the leviability of customs duty was upheld, the assessee was entitled to a deduction of the amount, as unpaid customs duty could not be treated as the income of the assessee. The Tribunal's deletion of the addition was therefore considered correct. The High Court did not leave any issue undecided. The operative direction was to answer the reference accordingly.
What were the facts?
The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, referred a question of law to the High Court of Punjab and Haryana concerning the assessment year 1984-85. The assessee, M/s Kasinka Tradings, Jalandhar City, is engaged in the business of purchasing and exporting hand tools. The dispute arose from an addition of Rs. 1,53,600 made by the revenue. The assessee had declared a loss, claiming that an amount received for customs duty was wrongly shown as income in its return for the assessment year 1984-85. This plea was initially not accepted by the Assessing Officer and CIT(A), but the ITAT had upheld the assessee's view in a prior instance for assessment year 1981-82, stating the amount would be taxable only if customs duty leviability was decided against the assessee.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the learned Tribunal is right in deleting the addition of Rs. 1,53,600 when a similar addition made in the assessment year 1981-82 was annulled in appeal by the CIT(A) and the assessee had himself surrendered it in its return of income for the assessment year 1984-85? (Question of law/mixed law and fact, concerning the deletion of addition under relevant sections of the Income Tax Act, 1961). Assessee's Contention: The judgment does not record specific arguments made by the assessee before the High Court. However, the ITAT's prior order for AY 1981-82, which was upheld, indicated that the amount would be taxable only if customs duty leviability was decided against the assessee. Revenue's Contention: The revenue argued that the Supreme Court judgment in Kasinka Trading and another v. Union of India and another, AIR 1995 SC 874, upheld the leviability of customs duty. Therefore, the assessee was entitled to a deduction of the amount, as unpaid customs duty could not be treated as income.
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
Date of decision: 2.8.2010 The Commissioner of Income Tax, Jalandhar -----Petitioner Vs. M/s Kasinka Tradings, Jalandhar City ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Vivek Sethi, Standing Counsel for the revenue.
Adarsh Kumar Goel,J.
At the instance of revenue, the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has referred following question of law for opinion of this Court, arising out of its order dated 23.2.1994 in ITA No.923(ASR) 1989, for assessment year 1984-85:- “Whether on the facts and in the circumstances of the case, the learned Tribunal is right in deleting the addition of Rs.1,53,600/- when the similar addition made in the assessment year 1981-82 has since been annulled in appeal by the CIT(A) and the assessee had himself surrendered it in its return of income for the assessment year 1984-85?”
The assessee is engaged in the business of purchase of hand tools and export thereof. In its return, the assessee declared loss on the ground that in the year 1981-82, amount received for payment of customs duty was wrongly shown as income. This plea was not accepted by the Assessing Officer and the CIT(A) but the Tribunal upheld the same view. It was held that if the matter about leviablity of customs duty was finally decided in favour of the assessee, the amount will be taxable and not otherwise.
We have heard learned counsel for the revenue.
Learned counsel for the revenue points out that by judgment of the Hon’ble Supreme Court in Kasinka Trading and another v. Union of India and another, AIR 1995 SC 874, the leviability has been upheld. The leviability of customs duty having been upheld, the assessee was entitled to deduction of the amount, as unpaid customs duty could not be treated as income of the assessee.
In view of above, the question referred is answered against the revenue and in favour of the assessee.
The reference is disposed of accordingly. (Adarsh Kumar Goel) Judge August 2, 2010 (Ajay Kumar Mittal) ‘gs’ Judge 2
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