PR. COMMISSIONER OF INCOME TAX-I vs. M/S ABHISHEK INDUSTRIES LTD., (NOW TRIDENT LTD.), E -212, KITCHLU NAGAR, LUDHIANA

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ITA/202/2017HC Punjab & HaryanaPHHC01117395201728 March 2019Author: MR. JUSTICE KRISHNA MURARI,MR. JUSTICE ARUN PALLI2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the question of law raised in the appeal, specifically concerning the retrospective applicability of Rule 8D to AY 2006-07, has been authoritatively decided by the Supreme Court in the case of Commissioner of Income Tax 5 Mumbai v. Essar Teleholdings Ltd. (2018) 3 SCC 253. The Supreme Court answered this question of law in favour of the assessee. Therefore, the present appeal is squarely covered by the said Supreme Court judgment. The High Court disposed of the appeal in terms of the Supreme Court's decision, implying that the ITAT's order, which aligned with the Supreme Court's view on the non-applicability of Rule 8D for AY 2006-07, was upheld. No specific finding on the quantum of disallowance beyond the Supreme Court's ruling was provided, as the matter was decided on the legal principle.

What were the facts?

The appeal by the revenue, Pr. Commissioner of Income Tax-I, Ludhiana, challenges an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which restricted an addition made under Section 14A of the Income Tax Act, 1961, to Rs. 50,000/-. The Assessing Officer (AO) had initially made an addition of Rs. 1,12,26,829/-. The core of the dispute pertains to the applicability of Rule 8D for the Assessment Year (AY) 2006-07. The AO had used a method for calculating disallowance under Section 14A, which the revenue considered reasonable and scientific. The assessee is M/s Abhishek Industries Ltd.

What were the issues?

1. Whether on fact and circumstances of the case and in law the Hon’ble ITAT is correct in confirming the order of CIT(A) in restricting the addition of Rs. 1,12,26,829/- made under Section 14A of the Income Tax Act to Rs.50,000/- holding that the provisions of Rule 8D are not applicable for A.Y. 2006-07 while the A.O. had restored to calculating the disallowance under Section 14A which as on date was the most reasonable and scientific method also approved by the legislature for making such disallowance? (Question of law turning on Section 14A and Rule 8D). Assessee's contention: The ITAT correctly held that Rule 8D is not applicable for AY 2006-07, leading to the restriction of the addition. Revenue's contention: The AO's method of calculating disallowance under Section 14A was reasonable and scientific, and the ITAT erred in restricting the addition by not applying Rule 8D.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITA-202-2017(O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CM-5992-CII-2019 in/and ITA-202-2017(O&M) Date of decision: 28.03.2019 Pr. Commissioner of Income Tax-I, Ludhiana … Appellant Versus M/s Abhishek Industries Ltd. … Respondent CORAM: HON’BLE MR. JUSTICE KRISHNA MURARI, CHIEF JUSTICE HON’BLE MR. JUSTICE ARUN PALLI, JUDGE Present: Mr. Rajesh Katoch, Advocate, for the appellant. Ms. Radhika Suri, Senior Advocate, with Mr. M.S. Kanda, Advocate, for the respondent. *** KRISHNA MURARI, C.J. (Oral) This appeal by the revenue raises the following question of law: “Whether on fact and circumstances of the case and in law the Hon’ble ITAT is correct in confirming the order of CIT(A) in restricting the addition of Rs. 1,12,26,829/- made under Section 14A of the Income Tax Act to Rs.50,000/- holding that the provisions of Rule 8D are not applicable for A.Y. 2006-07 while the A.O. had restored to calculating the disallowance under Section 14A which as on date was the most reasonable and scientific method also approved by the legislature for making such disallowance?.” RAJAN KUMAR 2019.03.29 15:16 I attest to the accuracy and integrity of this document ITA-202-2017(O&M) 2 Parties are not at issue that the question of law regarding the retrospective applicability of Rule 8D to assessment year 2008-06 has been the subject matter of the Hon’ble Supreme Court in the case tilted Commissioner of Income Tax 5 Mumbai v. Essar Teleholdings Ltd., (2018) 3 SCC 253, and the question of law has been answered in favour of the assessee. The question of law raised in this appeal is squarely covered by

the said judgment.

The appeal accordingly stands disposed of in terms of the aforesaid judgment of Hon’ble the Supreme Court.

( Krishna Murari )

Chief Justice

28.03.

2019 Rajan ( Arun Palli ) Judge

Whether speaking / reasoned:

YES

Whether Reportable:

NO RAJAN KUMAR 2019.03.29 15:16 I attest to the accuracy and integrity of this document

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