THE COMMISSIONER OF IT-I vs. M/S PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION

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ITA/649/2005HC Punjab & HaryanaPHHC01071321200508 December 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed both appeals filed by the Revenue. The Court noted that the learned counsel for the Revenue fairly stated that both questions of law raised in the present appeals had already been decided by this very Court on September 30, 2010, in the case of the assessee itself, reported as I.T.R. No. 20 of 2000, The Punjab State Industrial Development Corporation Ltd., Chandigarh v. CIT. Therefore, in view of the earlier decision on identical issues concerning the same assessee, the High Court found no reason to re-examine the matter and dismissed the appeals. The specific findings of the ITAT on the issues are not detailed in this High Court order, other than that they were adverse to the Revenue and were upheld by the High Court based on precedent.

What were the facts?

The appeals were filed by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 1998-99. The assessee is M/s Punjab State Industrial Development Corporation. The appeals raise two common questions of law. The Revenue's counsel conceded that these questions have been previously decided by the High Court on September 30, 2010, in the case of the assessee itself, specifically in I.T.R. No. 20 of 2000, The Punjab State Industrial Development Corporation Ltd., Chandigarh v. CIT. Following this concession, the High Court proceeded to pass its order.

What were the issues?

The High Court was to decide two questions of law: 1. Whether the ITAT was justified in holding that the sale of investments by the assessee constituted Capital Gains and not Profits and Gains from business, given that the assessee's main business is to make investments and earn profits from them (under Section 28 of the Income Tax Act, 1961). 2. Whether the ITAT was justified in holding that Project Survey Expenses should be treated as Revenue Expenditure, rather than Capital Expenditure (under Section 37 of the Income Tax Act, 1961). Contentions: Assessee: Not recorded in the judgment. Revenue: The revenue argued that the sale of investments should be treated as business income, not capital gains, as investment and profit generation is the assessee's primary business. The revenue also contended that Project Survey Expenses are in the nature of capital expenditure.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 28,Section 37

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.649 of 2005 & other connected case being I.T.A. No.91 of 2006 Date of decision: 8.12.2010 The Commissioner of Income Tax -----Appellant. Vs. M/s Punjab State Indl. Development Corporation. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Ms. Urvashi Dhugga, Standing Counsel for the appellant. --- ADARSH KUMAR GOEL, J.

This order will dispose of I.T.A. Nos.649 of 2005 and I.T.A. No.91 of 2006, as common questions of law are involved in both the appeals.

I.T.A. No.649 of 2005 has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh in I.T.A. No.599/Chd./2003 for the assessment year 1998-99 raising following questions of law:- i) “Whether on the facts and circumstances of the case, the Hon’ble ITAT is justified in holding that the sale of investments by the assessee was a I.T.A. No.649 of 2005 Capital Gain and not Profit and Gains from business, whereas the main business of the assessee is to make investments and earn profit from the same?” ii) “Whether in the facts and circumstances of the case, the Hon’ble ITAT is justified in holding that the Project Survey Expenses should be treated as Revenue Expenditure, whereas the Project Survey Expenses are in the nature of Capital Expenditure?” Learned counsel for the revenue fairly states that both the questions have been earlier decided by this Court on 30.9.2010 in the case of the assessee itself being I.T.R. No.20 of 2000 The Punjab State Industrial Development Corporation Ltd., Chandigarh v. CIT.

In view of above, the appeals are dismissed.

A photocopy of this order be placed on the file of other connected case. (ADARSH KUMAR GOEL) JUDGE December 08, 2010 (AJAY KUMAR MITTAL) ashwani JUDGE 2

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