COMMISSIONER OF INCOME TAX ROHTAK vs. HARYANA FINANCIAL CORPORATION LTD CHANDIGARH

ITR/5355/1990HC Punjab & HaryanaPHHC01021606199024 October 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What did the High Court hold?

The High Court held that the Tribunal was justified in law in allowing the deduction under Section 36(1)(viii). The Court found that the issue concerning the calculation of the deduction under Section 36(1)(viii) and the Commissioner's action under Section 263 had been settled by the Apex Court in the cases of Commissioner of Income-tax v. Andhra Pradesh State Financial Corporation, (1998) 233 ITR 195 and Commissioner of Income-Tax v. Kerala State Industrial Development Corporation, (1998) 233 ITR 197. The Revenue's counsel could not dispute the applicability of these judgments. Therefore, the High Court respectfully followed these precedents. The finding on the first issue is that the assessee was entitled to the deduction as held by the Tribunal. The second issue, regarding the Commissioner's action under Section 263, was implicitly resolved by the reliance on the Supreme Court judgments which would have addressed such procedural or substantive challenges. The operative direction is to answer the questions in favour of the assessee.

What were the facts?

The Commissioner of Income-tax, Haryana, Rohtak (Revenue) has filed these Income Tax Reference Applications (ITR Nos. 53 to 55 of 1990) at the instance of the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh. The references arise from the Tribunal's orders dated 5.2.1983 concerning assessment years 1976-77, 1975-76, and 1977-78. The assessee is The Haryana Financial Corporation Ltd., Chandigarh. The core dispute revolves around the deductibility of a certain percentage of total income under Section 36(1)(viii) of the Income Tax Act, 1961, and the validity of the Commissioner's action under Section 263. The High Court is asked to decide questions of law arising from the Tribunal's orders.

What were the issues?

The High Court was asked to decide the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that under Section 36(1)(viii) the assessee was entitled to a deduction of 47% of the total income arrived at without taking into account this deduction? 2. Whether the Tribunal is justified in overlooking the fact that the Commissioner of Income-tax had taken action under Section 263 after the issue of the relevant order dated 13.5.1979 by the Central Government Direct Taxes? Contentions: Revenue: * Argued that the Tribunal was not justified in allowing a deduction of 47% of the total income under Section 36(1)(viii) without considering that this deduction itself should be factored into the calculation of total income. * Argued that the Tribunal overlooked the Commissioner's action under Section 263, implying that the Commissioner's revisionary powers were not properly considered or that the order passed by the Central Government Direct Taxes was relevant to the Commissioner's action. Assessee: * The judgment does not explicitly record the assessee's arguments. However, the High Court's decision indicates that the assessee's position was upheld.

Which sections of the Income-tax Act were involved?

Section 36(1)(viii),Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

**** I.T.R. Nos.53 to 55 of 1990 Date of Decision:24.10.2006 The Commissioner of Income-tax, CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Shri Yogesh Putney, Advocate for the applicant. **** ADARSH KUMAR GOEL, J. At the instance of Revenue, Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, `the Tribunal') has referred the following questions of law arising out of its orders dated 5.2.1983 in I.T.A. No.230 of 1980, I.T.A. No.47 & 48 of 1981 relating to assessment years 1976-77, 1975-76 and 1977-78 for the opinion of this Court:- “(i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that under Section 36(1)(viii) the assessee was entitled to deduction of 47% of the total income arrived at without taking into account this deduction?” (ii) Whether the Tribunal is justified in overlooking the fact that the Commis

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