C I T vs. M/S HAPPY FORGINGS LTD.

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ITA/590/2007HC Punjab & HaryanaPHHC01073303200711 February 2008Author: MR. JUSTICE SATISH KUMAR MITTAL,MR JUSTICE RAKESH KUMAR GARG2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that the Revenue's counsel fairly conceded that a similar question of law, concerning the deletion of addition on account of advance excise duty paid which was neither debited to the profit and loss account nor sales account or made part of the purchase price, had been raised in a reference before the High Court in the case of Raj & Sen Deeps Ltd. The counsel further conceded that this question was answered against the Revenue and in favour of the assessee. In view of this concession and the prior ruling, the High Court was of the opinion that no substantial question of law arose for consideration in the present appeal. Therefore, the appeal was dismissed. No specific issue was left undecided.

What were the facts?

The Revenue (Commissioner of Income-tax, Ludhiana-II) filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT had dismissed the Revenue's appeal concerning the Assessment Year 1998-99. The dispute arose from the Assessing Officer's disallowance of Rs. 50,07,668/- claimed by the assessee, M/s. Happy Forgings Ltd., as advance excise duty payment. The Assessing Officer held that the duty was not yet payable. The Commissioner of Income Tax (Appeals) had deleted this addition. The ITAT upheld the deletion, relying on its prior decision in the case of Raj & Sen Deeps Ltd. The Revenue's counsel conceded that a similar issue was raised in a reference before the High Court concerning the Raj & Sen Deeps Ltd. case, and that reference was decided against the Revenue.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was correct in holding that the assessee's claim for advance excise duty, which had not actually become payable, was valid? (Question of law, turning on Section 43-B of the Income Tax Act, 1961). The Revenue argued that the ITAT's finding was perverse, and perversity gives rise to a question of law. The assessee's contentions were not recorded in the judgment. The Revenue relied on the principle that perversity constitutes a question of law.

Which sections of the Income-tax Act were involved?

Section 43-B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 590 of 2007 DATE OF DECISION: FEBRUARY 11, 2008 Commissioner of Income-tax, Ludhiana-II, .....APPELLANT Versus M/s. Happy Forgings Ltd., Kanganwal Road, Ludhiana ....RESPONDENT CORAM: HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present: Mr.Sanjiv Bansal, Advocate, for the appellant. .. SATISH KUMAR MITTAL, J. The instant appeal filed by the revenue is directed against the order dated 08.08.2005 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A” Chandigarh (hereinafter referred to as `the ITAT') in ITA No.679/Chandi/2002 in case of the respondent for the Assessment Year 1998-99 by raising the following substantial question of law:- “Whether on the facts and circumstances of the case Hon'ble ITAT was correct on holding that assessee's claim for the Excise Duty paid in advance, which has not actually become payable, is correct? As such findings given by the Hon'ble ITAT are perverse and it is a settled law that on perversity a question of law arises? In the present case the Assessing Officer disallowed the claim of the assessee with regard to an amount of Rs.50,07,668/- which was paid as Excise Duty in advance while holding that when the said duty had not become payable, there was no justification to pay the same in advance. Aggrieved against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who vide order dated 05.07.2002

I.T.A.

No. 590 of 2007

-2- deleted the said addition. Being not satisfied with the order of the Commissioner of Income Tax (Appeals), the revenue preferred an appeal before the ITAT, who vide order dated 08.08.2005 dismissed the same while taking into consideration its earlier decision dated 18.02.1993 on the similar issue passed in the case of Raj & Sen Deeps Ltd., Ludhiana vs. A.C.I.T., Ludhiana in ITA No.1853/Chandi/1992 for the Assessment Year 1989-90. Shri Bansal, learned counsel for the revenue very fairly conceded that against the decision in the case of Raj & Sen Deeps Ltd (supra), the department sought reference in ITR No.291 of 1995 by raising the following question of law for the opinion of this Court, which is similar to the one as raised in the instant appeal:- “Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in deleting the addition made u/s 43-B on account of advance excise duty paid which was neither debited to profit and loss account nor sales account or made part of the purchase price?” He further conceded that in the said reference, the afore-said question has been answered against the revenue and in favour of the assessee. In view of the aforesaid, in our opinion, in this appeal also, no substantial question of law is arising for consideration of this Court. Dismissed. (SATISH KUMAR MITTAL) JUDGE

February 11, 2008 (RAKESH KUMAR GARG) vkg JUDGE

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