NAHAR EXPORTS LTD vs. COMMISSIONER OF INCOME TAX

ITA/95/2004HC Punjab & HaryanaPHHC01051619200414 December 2009Author: MR. JUSTICE M.S. SULLAR,MR. JUSTICE SATISH KUMAR MITTAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Cash Compensatory Allowance is similar to Duty Entitlement Pass Book (DEPB) benefits. The Court noted that similar benefits received by the assessee, such as DEPB, had been disallowed by the High Court in the case of Liberty India v. Commissioner of Income-Tax (2007) 293 ITR 520, which was affirmed by the Supreme Court in Liberty India v. Commissioner of Income-Tax, (2009) 317 Income Tax Reports 218 (SC). Since the learned counsel for the appellant could not controvert that the Cash Compensatory Allowance was similar to DEPB and thus could not make out a case for its deduction under Section 80-I, the Court concluded that the controversy was no longer res integra. Therefore, no substantial question of law arose from the ITAT's order. The appeal was dismissed.

What were the facts?

The assessee, Nahar Exports Limited, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal pertained to assessment year 1992-93 and challenged the ITAT's decision disallowing a deduction claimed under Section 80-I of the Act. The dispute centered on whether Cash Compensatory Allowance received by the assessee for its exports should be considered as profits and gains derived from its industrial undertaking. The ITAT had disallowed this deduction, finding no direct nexus between the allowance and the industrial undertaking, considering it merely a receipt under an export promotion scheme.

What were the issues?

1. Whether, on a correct interpretation of Section 80-I of the Act, the ITAT was right in holding that the cash compensatory allowance received by the appellant was not profits and gains derived from its industrial undertaking? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the ITAT misdirected itself in law and on facts in holding that the appellant was not entitled to deduction under Section 80-I of the Act in respect of the claim made? 3. Whether the findings of the ITAT, holding the appellant not entitled to deductions under Section 80-I, are arbitrary and perverse? Assessee's contention: The Cash Compensatory Allowance received from the Central Government against exports of goods manufactured by its industrial undertaking is an additional price received from the Government for exports, and thus constitutes profits and gains derived from the industrial undertaking, eligible for deduction under Section 80-I. Revenue's contention: Not recorded in the judgment. The assessee stated it was pressing only the first question.

Which sections of the Income-tax Act were involved?

Section 80-I,Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 95 of 2004 DATE OF DECISION : 14.12.2009 Nahar Exports Limited, Ludhiana .... APPELLANT Versus Commissioner of Income Tax (Central), Ludhiana ..... RESPONDENT

CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR

Present: Mr. Sanjay Bansal, Senior Advocate, with Ms. Shweta Malhotra, Ms. Harpreet Kaur and Mr. Prashant Bansal, Advocates, for the appellant-assessee. Mr. K.K. Mehta, Advocate, for the respondent-revenue. * * * SATISH KUMAR MITTAL , J. The assessee has filed this appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as `the Act'), against the order dated 24.9.2003, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), Chandigarh (hereinafter referred to as `the ITAT') in ITA No. 440/Chandi/1996, pertaining to the assessment year 1992-93, raising the following substantial questions of law :- (i) Whether on a correct and proper interpretation of the provisions of Section 80-I of the Act, the ITAT was right

ITA No. 95 of 2004 -2- in law in holding that the cash compensatory allowance received by the appellant was not profits

The order continues below.

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