COMMISSIONER OF INCOME TAX-III vs. M/S OSWAL WOOLLEN MILLS

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ITA/566/2006HC Punjab & HaryanaPHHC01075302200624 January 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. The Court noted that the Revenue's counsel fairly stated that both substantial questions of law were covered against the Revenue by existing judicial precedents. Specifically, question 2 was covered by the High Court's own judgment in I.T.A. No. 293 of 2005, Commissioner of Income tax-I, Ludhiana v. M/s Vardhaman Polytex Limited, Ludhiana, decided on May 22, 2006. Furthermore, question 1 was covered by the Supreme Court's decision in Civil Appeal No. 5315 of 2007, Hero Exports, G.T. Road, Ludhiana v. Commissioner of Income Tax, (Central), Ludhiana, decided on November 20, 2007, which had decided the same issue in favour of the assessee. In light of these binding decisions, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax-III, Ludhiana, filed an appeal before the High Court of Punjab and Haryana at Chandigarh against an order dated May 26, 2006, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal concerned assessment year 2001-2002 and challenged two issues decided by the ITAT. The assessee is M/s Oswal Woollen Mills Ltd., Ludhiana. The High Court had previously issued notice of motion regarding the first question. Today, the Revenue's counsel conceded that both questions were covered against the Revenue by previous judgments of the High Court and the Supreme Court.

What were the issues?

The High Court was to decide two substantial questions of law: 1. Whether the ITAT was correct in directing that 10% of interest income should not be reduced from the profit of business. 2. Whether the ITAT was correct in holding that Central Sales Tax and Sales Tax should be excluded from the total turnover for computing deduction under Section 80HHC. The Revenue argued that the ITAT erred on both counts. The Assessee contended that the ITAT's decision on both issues was legally sound. For question 2, the Revenue acknowledged that this Court's judgment in Commissioner of Income tax-I, Ludhiana v. M/s Vardhaman Polytex Limited, Ludhiana (dated May 22, 2006) covered the issue against them. For question 1, the Revenue conceded that the Supreme Court's decision in Hero Exports, G.T. Road, Ludhiana v. Commissioner of Income Tax, (Central), Ludhiana (dated November 20, 2007) was also against them.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 566 of 2006 DATE OF DECISION : 24.01.2008 Commissioner of Income Tax-III, Ludhiana .... APPELLANT Versus M/s Oswal Woollen Mills Ltd., 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-revenue. Mr. Akshay Bhan, Advocate, for the respondent-assessee.

* * * SATISH KUMAR MITTAL, J. ( Oral ) The Department has filed this appeal against the order dated 26.5.2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, in ITA No. 594/Chandigarh/2005 (the assessment year 2001-2002), raising the following two substantial questions of law :

“1. Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in directing not to reduce 10% of the interest income from the profit of business?

2.

Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in holding that Central Sales

ITA No. 566 of 2006 -2- Tax, and Sales Tax be excluded from the total turnover of the assessee while computing deduction u/s 80 HHC?” Earlier, vide order dated April 3, 2007, at the time of motion hearing, it was not disputed that the question No.2 is covered against the revenue by a judgment of this Court rendered in I.T.A. No. 293 of 2005 “Commissioner of Income tax-I, Ludhiana v. M/s Vardhaman Polytex Limited, Ludhiana” decided on 22.5.2006. However, notice of motion was issued with regard to question No.

1.

Today, counsel for the appellant very fairly states that even the question No.1 is also covered against the Revenue by decision of the Supreme Court in Civil Appeal No. 5315 of 2007, Hero Exports, G.T. Road, Ludhiana v. Commissioner of Income Tax, (Central), Ludhiana, decided on 20.11.2007, where the same question has been decided in favour of the assessee. In view of the said decision of the Supreme Court, this appeal is hereby dismissed. ( SATISH KUMAR MITTAL ) JUDGE January 24, 2008 ( RAKESH KUMAR GARG ) ndj JUDGE

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