THE COMMISSIONER OF INCOME-TAX, HARYANA vs. M/S MAHAJAN INTERNATIONAL, PANIPAT

ITR/30/1992HC Punjab & HaryanaPHHC01021993199216 July 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE ALOK SINGH5 pages
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What were the facts?

The Commissioner of Income Tax (CIT), Haryana Rohtak, filed two references (ITR Nos. 30 and 31 of 1992) before the High Court of Punjab and Haryana at Chandigarh, seeking an opinion on a question of law referred by the Income Tax Appellate Tribunal (ITAT). The references arose from the ITAT's order dated January 31, 1984, concerning assessment year 1977-78. The assessee, M/s Mahajan International, Panipat, an exporter of handloom items, claimed deductions under Section 35B of the Income Tax Act, 1961, for various expenses related to its export business, including salary to export staff, office rent, printing and stationery, telephone, telex, and postage. The Assessing Officer (AO) disallowed part of the claim, stating that expenses must be exclusively attributable to exports. The CIT(A) partly allowed the claim, and the ITAT granted further relief. The total disputed amount is not explicitly stated but relates to the further relief granted by the ITAT.

What did the High Court hold?

The High Court held that the ITAT's order was correct. Regarding the revenue's submission about the incorrect assumption of the assessee's business nature, the Court found that this assumption was not the basis of the ITAT's order. The core reasoning of the ITAT was that the expenses were relatable to export. The Court found that the ITAT's finding that the expenses were relatable to export was not perverse and, if expenses are relatable to export only, deduction under Section 35B could not be objected to. Therefore, the question referred to the High Court was answered against the revenue and in favour of the assessee. The references were disposed of accordingly. The specific amount of Rs. 27,383/- mentioned in the question appears to be a summation of the further relief granted by the ITAT on various heads, but the judgment does not break down this figure or explicitly confirm it as the total disputed amount.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in allowing a further sum of Rs. 27,383/- under section 35(b) [sic, 35B] of the Income Tax Act, 1961? Assessee's Contentions: The assessee claimed deductions under Section 35B for expenses related to its export business. The ITAT, in its order, allowed further relief on salary to export staff (75% of the total amount), rent of export office premises (50% of the total amount), and printing and stationery, telephone, telex, and postage (50% of the total amount where specific details were not available). Revenue's Contentions: The revenue argued that the ITAT's order contained an incorrect assumption regarding the nature of the assessee's business (stating it was vegetables instead of handlooms) and that the expenses claimed were not covered by Section 35B(1)(b). The revenue's primary contention was that deductions under Section 35B should only be allowed for expenditure exclusively attributable to exports.

Which sections of the Income-tax Act were involved?

Section 35B,Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITR Nos.30 and 31 of 1992 Date of decision: 16.7.2010 The Commissioner of Income Tax, Haryana Rohtak -----Petitioner Vs. M/s Mahajan International, Panipat ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE ALOK SINGH Present:- Mr. Sukant Gupta, Advocate for the revenue. Mr. S.K.Mukhi, Advocate with Ms. Jyoti, Advocate for the assessee. Adarsh Kumar Goel,J.

1.

The Income Tax Appellate Tribunal, Delhi Bench ‘C’, New Delhi has referred for opinion of this Court following question of law under section 256(2) of the Income Tax Act, 1961 (for short, ‘the Act’) in pursuance of direction of this Court, arising out of order of the Tribunal dated 31.1.1984 in ITA Nos.667 and 8 (CHANDI)/1982, for the assessment years 1977-78 and 1977-78:- “Whether on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in allowing a further sum of Rs.27,383/- under section 35(b) of the Income Tax Act, 1961?”

2.

The assessee is exporter of handloom items and claimed deduction under section 35B of the Act in respect of salary to the ITR Nos.30 and 31 of 1992 staff handling expo

The order continues below.

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