THE C I T PATIALA vs. M/S PUNJAB SMALL INDUSTRIES AND EXPORTS

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ITR/549/1995HC Punjab & HaryanaPHHC01032542199525 August 2008Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE HEMANT GUPTA1 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, in its judgment of even date in a related case (I.T.R. No. 72 of 1989), answered the referred questions against the Revenue and in favour of the assessee. While the detailed reasoning is not provided in this specific excerpt, it is stated that the decision in the related case forms the basis for the disposal of this reference. Therefore, the ITAT's decision to uphold the CIT(A)'s deletion of the addition of Rs. 84,12,619/- on account of interest receivable on an accrual basis was affirmed. Similarly, the ITAT's decision to allow a change in the method of accounting for part of the source of income was also upheld. The operative direction is that the reference is disposed of in accordance with the findings in the related judgment.

What were the facts?

This case concerns an Income Tax Reference filed by the Commissioner of Income Tax, Patiala (the Revenue) against The Punjab Small Industries & Export Corporation Limited, Chandigarh (the assessee) for the assessment year 1985-86. The reference arises from an order dated May 13, 1995, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in I.T.A. No. 989/Chandi/1989. The Revenue is challenging the ITAT's decision to uphold the Commissioner of Income Tax (Appeals) [CIT(A)] order, which deleted an addition of Rs. 84,12,619/- made on account of interest receivable by the assessee on an accrual basis. The reference also questions the ITAT's allowance of a change in the method of accounting for a part of the income source.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT(A) deleting the addition of Rs. 84,12,619/- made on account of interest receivable by the assessee on an accrual basis? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in allowing a change of method of accounting for part of the source of income? The Revenue contended that the ITAT erred in law by upholding the deletion of the addition related to interest receivable on an accrual basis and by allowing a change in the accounting method for a portion of the income. The judgment does not explicitly record the arguments made by the assessee, other than implying their position through the questions referred and the final decision. The judgment also does not name any specific authorities, circulars, or precedents relied upon by either side.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income Tax Reference No. 549 of 1995 Date of decision: August 25, 2008 The Commissioner of Income Tax, Patiala. .. Applicant. v. The Punjab Small Industries & Export Corporation Limited, Chandigarh. .. Respondent. CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA

HON'BLE MR. JUSTICE RAJESH BINDAL Present: Ms. Urvashi Dhugga, Advocate for the applicant. Mr. Akshay Bhan, Advocate for the respondent.

.. Rajesh Bindal J. The following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, `the Tribunal') arising out of order dated 13.5.1995 in I.T.A. No. 989/Chandi/1989, for the assessment year 1985-86:

“1. Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT(A) deleting addition of Rs. 84,12,619/- made on account of interest receivable by the assessee on accrual basis ?

2.

Whether on the facts and in the circumstances of the case, the ITAT was right in law in allowing change of method of accounting for part of the source of income ?” For the detailed reasons recorded in our judgment of even date in I.T.R. No. 72 of 1989 – The Commissioner of Income-Tax, Patiala v. M/s Punjab State Small Industries Corporation Ltd., Chandigarh, the questions referred to above, are answered against the Revenue and in favour of the assessee. The reference is disposed of accordingly. (Rajesh Bindal) Judge (Hemant Gupta) Judge August 25, 2008 mk

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