COMMISSIONER OF IT vs. M/S NAHAR SPINNING MILLS LTD

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ITA/490/2005HC Punjab & HaryanaPHHC01068641200517 August 2007Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law raised by the Revenue was liable to be answered against the Revenue and in favour of the assessee. The Court noted that a similar substantial question of law had previously come up for consideration in the case of Commissioner of Income Tax 1, Ludhiana v. M/s Vardhman Polytex Ltd. (ITA No.293 of 2005 decided on 22.5.2006). In that case, after considering various judgments and provisions, the Court had decided the question against the Revenue and in favour of the assessee. Since no argument was raised by the Revenue to demonstrate why the present appeal should be treated differently, the High Court followed its earlier decision. Consequently, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax (Central), Ludhiana, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated April 29, 2005, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A). The appeal pertains to the assessment year 1996-97 and concerns M/s Nahar Spinning Mills Ltd. The core of the dispute revolves around the computation of deduction under Section 80HHC of the Income Tax Act, 1961. The Revenue's grievance is that the Tribunal directed the exclusion of Sales Tax and Central Sales Tax from the total turnover for the purpose of calculating this deduction.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Tribunal was correct in directing to exclude Sales Tax and Central Sales Tax from the total turnover for computing deduction under Section 80HHC? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the Tribunal erred in directing the exclusion of Sales Tax and Central Sales Tax from the total turnover when computing the deduction under Section 80HHC. The Revenue relied on the fact that a similar substantial question of law had been considered by the High Court in the case of Commissioner of Income Tax 1, Ludhiana v. M/s Vardhman Polytex Ltd. (ITA No.293 of 2005 decided on 22.5.2006). The Revenue did not present any argument to differentiate the present appeal from the Vardhman Polytex Ltd. case.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No.490 of 2005 Date of decision 17 . 8 .2007 Commissioner of Income Tax (Central),Ludhiana ..Appellant Versus M/s Nahar Spinning Mills Ltd. .. Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE RAJESH BINDAL PRESENT: Mr.Vivek Sethi, Advocate for the appellant

M.M.Kumar, J. This appeal filed under Section 260 A of the Income Tax Act,1961 is directed against order dated 29.4.2005 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), Chandigarh (for brevity 'the Tribunal') in ITA No. 686/Chandi/2000 for the assessment year 1996-97. The Revenue has claimed that following substantial question of law would emerge from the order of the Tribunal : “ Whether on the facts and circumstances of the case, the Tribunal was correct in directing to exclude Sale-tax and Central Sale tax from the total turnover for computing deduction u/s 80 HHC ?” It has remained undisputed that a similar substantial question of law came up for consideration of this Court in the case of Commissioner of Income Tax 1, Ludhiana v. M/s Vardhman Polytex

Ltd.

, Ludhiana

(ITA No.293 of 2005 decided on 22.5.2006). This Court after noticing various judgements and provisions had decided the question against the Revenue and in favour of the assessee. There is no argument raised to show that this appeal deserved to be treated differently than the appeal decided vide order dated 22.5.2006 concerning M/s Vardhman Polytex Ltd. (supra). Therefore, the substantial question of law raised is liable to be answered against the Revenue and in favour of the assessee.

For the reasons afore-mentioned, this appeal fails and the same is dismissed. (M.M.Kumar) Judge (Rajesh Bindal) 17.8.2007 Judge okg

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