COMMISSIONER OF INCOME TAX, CH vs. PUNJAB STATE COOP.SUPPLY & MKT

ITR/190/1999HC Punjab & HaryanaPHHC01038638199904 December 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What were the facts?

The Income Tax Appellate Tribunal (ITAT) passed an order on September 23, 1998, in ITA No. 666/96 for the assessment year 1993-94. The Commissioner of Income Tax, Chandigarh (Revenue) challenged this order by referring a question of law to the High Court of Punjab and Haryana. The dispute concerns the allowability of guest house expenses amounting to Rs. 60,000/-. The ITAT had directed the Assessing Officer (AO) to allow this deduction. The Revenue contended that such a deduction is specifically disallowed under Section 37(4) of the Income Tax Act, 1961.

What did the High Court hold?

The High Court answered the question of law in favour of the Revenue and against the assessee. The Court relied on its own previous judgment in Commissioner of Income-Tax, Patiala Vs. M/S Punjab Tractors, Mohali (ITR No. 392 of 1995, decided on 18.9.2006) and the Supreme Court's decision in Britannia Industries Limited Vs. Commissioner of Income Tax and another (2005) 278 ITR 546. The Supreme Court's reasoning, as quoted, indicated that the Legislature's intention was clear and unambiguous in excluding expenses like rent, repairs, and maintenance for premises used as a guest house, as defined in sub-section (4) of Section 37. The Court emphasized interpreting the statute in its literal sense when the language is clear. The reference was disposed of accordingly.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in directing the AO to allow guest house expenses of Rs. 60,000/- on account of rent when such deduction is not allowable specifically with respect to Section 37(4) of the Income Tax Act? Assessee's contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's direction to allow the deduction implies the assessee argued for its allowability. Revenue's contentions: The Revenue argued that Section 37(4) of the Income Tax Act disallows expenses related to guest houses, including rent, and therefore the ITAT erred in allowing the deduction.

Which sections of the Income-tax Act were involved?

Section 37(4),Section 37(5),Section 31,Section 32

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
I.T.R No.190 of 1999 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R No.190 of 1999 Date of decision: 4.12.2006 Commissioner of Income Tax, Chandigarh ...Appellant Versus M/S Punjab State Coop.Supply & Mktg. Fed. Ltd.,Chandigarh ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr.S.K.Garg Narwana, Advocate for the Revenue. ****

JUDGMENT Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 23.9.1998 passed in I.T.A.No.666/96, in respect of the assessment year 1993-94. “Whether on the facts and in the circumstances of the case, the ITAT was right in law in directing AO to allow guest house expenses of Rs.60,000/- on account of rent when such deduction is not allowable specifically w.r.t.Section 37(4) of the I.T.Act?”

The question has been gone into by this court in The Commissioner of Income-Tax, Patiala Vs. M/S Punjab Tractors, Mohali, ITR No.392 of 1995 decided on 18.9.2006 and following the judgment of the Hon'ble Supreme Court in Britannia Industries Limited Vs. Commissione

The order continues below.

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