C.I.T.JDR. vs. M/S INDO. ASIAN SWITCHGEARS PVT. LTD.

ITR/16/1997HC Punjab & HaryanaPHHC01035378199716 July 2007Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryDismissed

What were the facts?

The Commissioner of Income Tax, Jalandhar (Revenue) has filed a reference application under Section 256(2) of the Income Tax Act, 1961, seeking the opinion of the High Court on a question of law arising from an order dated 16.4.1992 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT's order was in ITA 521(ASR)/1987 concerning assessment year 1979-80. The dispute pertains to expenses claimed by M/s Indu Asian Switchgears P. Ltd. (assessee) on account of commission paid to agents/marketing organizers and turnover discount paid to distributors. The Revenue challenged the ITAT's decision to exclude these amounts from disallowance under Section 37(3A) of the Income Tax Act.

What did the High Court hold?

The High Court held that the question of law raised was decided against the Revenue. This decision was based on a previous judgment by a Division Bench of the same High Court in the case of Commissioner of Income tax v. Indo Asian Switchgears (P) Ltd. (2002) 257 ITR 645. That earlier case, also concerning the assessee M/s Indu Asian Switchgears (P) Ltd. but for assessment year 1980-81, had answered the same question in favour of the assessee and against the Revenue. Therefore, following its own precedent, the Court ruled that the expenses on account of commission and turnover discount were not to be taken into account for the purpose of disallowance under Section 37(3A). The operative direction was to decide the question of law against the Revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT is right in law in holding that expenses on account of commission paid to agents/marketing organizers amounting to Rs. 5,13,578/- are not to be taken into account for the purpose of disallowance under Section 37(3A) of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case, the learned ITAT is right in law in holding that turnover discount paid to distributors amounting to Rs. 10,33,787/- is not to be taken into account for the purpose of disallowance under Section 37(3A) of the Income Tax Act? Assessee's Contention: The assessee argued that these expenses were not to be considered for disallowance under Section 37(3A). Revenue's Contention: The Revenue contended that these expenses should be taken into account for disallowance under Section 37(3A).

Which sections of the Income-tax Act were involved?

Section 37(3A),Section 256(2)

AI-generated summary — verify with the full judgment below

ITR 16 of 1997 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITR No. 16 of 1997 Date of decision 16 .7 .2007 The Commissioner of Income Tax, Jalandhar. .. Applicant Versus M/s Indu Asian Switchgears P. Ltd. .. Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE AJAY KUMAR MITTAL PRESENT: Mr.Sanjiv Bansal,, Advocate for the applicant Mr. Sanjay Bansal, Sr. Advocate with Mr. Parvesh Saini, Advocate M.M.Kumar, J. At the instance of the Revenue this Court while exercising juri iction under Section 256(2) of the Income Tax Act, 1961 has required the Income Tax Appellate Tribunal to refer the following question of law for its opinion which has arisen from order dated 16.4.1992 passed by the Tribunal in ITA 521(ASR)/1987 in respect of assessment year 1979-80. “ Whether on the facts and in the circumstances of the case, the learned ITAT is right in law in holding that the expenses on account of commission paid to the agents/ marketing organisers amounting to Rs.5,13,578/- and Rs.10,33,787/- being the turnover discount paid to the distributors are not to be taken into account for the purpose of disallowance u/s 37(3A) of the Income Tax Act?” The af

The order continues below.

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