COMMISSIONER OF INCOME TAX vs. VARDHMAN SPINNING & GEN. MILLS LTD.

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ITA/532/2006HC Punjab & HaryanaPHHC01075265200612 February 2007Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that a similar question of law had already been decided by the same jurisdictional High Court in the case of Commissioner of Income-Tax-I, Ludhiana Vs. M/s Vardhman Polytex Ltd. (2006 (203) CTR 397). In that case, the High Court had answered the issue against the Revenue. Therefore, following its own precedent in Vardhman Polytex Ltd.'s case, the High Court found no merit in the present appeal and dismissed it. The specific reasoning from the Vardhman Polytex Ltd. case, which would form the ratio decidendi for this judgment, is not detailed here but is implied to be against the inclusion of sales tax and excise duty in the turnover for Section 80HHC purposes.

What were the facts?

The Revenue has filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated March 23, 2006, passed by the Income Tax Appellate Tribunal (ITAT). The appeal pertains to the assessment year 1998-99 and concerns the assessee, Vardhman Spinning & General Mills Ltd. The dispute revolves around whether sales tax and excise duty should be included in the total turnover for computing the deduction under Section 80HHC of the Act, given that these amounts were realized as part of the sale proceeds of manufactured goods. The ITAT had previously ruled on this matter.

What were the issues?

1. Whether, on the facts and in law, the Income Tax Appellate Tribunal was correct in holding that sales tax and excise duty are not includible in the total turnover for computing the deduction under Section 80HHC of the Income Tax Act, 1961, when both items were realized as part of the sale proceeds of the goods manufactured by the Respondent? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue contended that sales tax and excise duty, having been realized as part of the sale proceeds, should be included in the total turnover for the purpose of calculating the deduction under Section 80HHC. The Revenue relied on the principle that amounts realized as part of sale proceeds form part of the turnover.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80HHC

AI-generated summary — verify with the full judgment below

I.T.A.

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A.

Date of decision: 12.2.2007 Commissioner of Income-Tax, Ludhiana-I, Ludhiana ...Appellant Versus Vardhman Spinning & General Mills Ltd., Chandigarh Road, Ludhiana. ...Respondent CORAM: HON'BLE MR.JUSTICE M.M.KUMAR HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr.Sanjiv Bansal, Advocate for the appellant. **** RAJESH BINDAL, J. The Revenue has approached this Court by filing the present appeal under Section 260-A of Income Tax Act, 1961 (for short 'the Act') against order dated 23.3.2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (for short 'the Tribunal') in ITA No. 213/Chandi/2005 in respect of the assessment year 1998-99 raising the following substantial question of law:- “Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was correct in holding that the sales tax and excise duty were not includible in total turnover for computing deduction u/s 80HHC of I.T.Act, when both the items were realized as a part of sale proceeds of the goods manufactured by the Respondent?” At the very outset, learned counsel appearing for the Revenue could not dispute that similar question of law has already been gone into by I.T.A.

-2- *** this Court in Commissioner of Income-Tax-I, Ludhiana Vs. M/s Vardhman Polytex Ltd., Chandigarh Road, Ludhiana, 2006 (203) CTR 397 and answered against the revenue.

For the reasons stated in Vardhman Polytex Ltd's case (supra), the issue raised in the present appeal, being covered by the judgment of juri ictional High Court, we do not find any merit in the present appeal and the same is accordingly dismissed. (Rajesh Bindal) Judge February 12 , 2007 (M.M.Kumar) Pka Judge

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