C.I.T. PATIALA vs. M/S ESS ESS KEY ENGG. CO. PVT. LTD.

ITR/331/1995HC Punjab & HaryanaPHHC01032404199513 July 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY2 pages
AI SummaryRemanded

What were the facts?

The Commissioner of Income-tax (Central), Ludhiana, referred a question of law to the High Court of Punjab and Haryana at Chandigarh under Section 256(1) of the Income Tax Act, 1961. This arose from an order of the Income Tax Appellate Tribunal, Amritsar Bench, dated June 28, 1993, concerning the assessment year 1985-86. The dispute involved the deletion of a disallowance of Rs. 54,115, which represented the value of a perquisite arising from concessional interest charged on borrowings from the Managing Director. The authorities below had deleted this disallowance.

What did the High Court hold?

The High Court noted that the question referred had already been decided in the case of the assessee itself by a previous order of the High Court dated May 9, 2007, in I.T.R. No. 82 of 1989, concerning the assessment year 1979-80. Following this precedent, the Court answered the referred question against the revenue and in favour of the assessee. The operative direction was to dispose of the reference in accordance with this finding. The specific reasoning from the prior judgment regarding Section 40A(5)/40(C) and the treatment of concessional interest on borrowings from a Managing Director was implicitly adopted.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in upholding the order of the first Appellate Authority in deleting the disallowance of Rs. 54,115/- representing the value of perquisite of concessional rate of interest charged on borrowings from the Managing Director, in view of the provisions of Section 40A(5)/40(C) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. The parties stated that the issue had been decided in a previous case involving the same assessee. Revenue's Contention: The judgment does not record any specific arguments made by the revenue before the High Court. The parties stated that the issue had been decided in a previous case involving the same assessee.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 40A(5),Section 40(C)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.331 of 1995 Date of decision: 13.7.2009 The Commissioner of Income-tax (Central), Ludhiana. -----Applicant. Vs. M/s Ess Ess Kay Engg. Co.Pvt. Ltd., Kapurthala. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE DAYA CHAUDHARY Present:- Mr. Krishan Mehta, Advocate for the applicant. Mr. S.K. Mukhi, Advocate for the respondent. ---

ORDER:

1.

Following question of law has been referred for opinion of this Court under Section 256(1) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated 28.6.1993 in I.T.A. No.360 (ASR)1989 for the assessment year 1985-86:- “Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in upholding the order of first Appellate Authority in upholding the order of first Appellate Authority in I.T.R. No.331 of 1995 deleting the disallowance of Rs.54,115/- representing the value of perquisite of concessional rate of interest charged on borrowings from Managing Director in view of the provisons of section 40A(5)/40(C) of the I.T.Act, 1961?”

2.

Learne

The order continues below.

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