C.I.T.AMRITSAR vs. M/S SURINDER SUGAR STORE AMRITSAR

ITR/29/1990HC Punjab & HaryanaPHHC01021577199013 October 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Appellate Tribunal was right in law in deleting the addition of Rs. 23,835/- made under Section 40A(3) of the Income-tax Act, 1961. The Court followed its own earlier decision in I.T.R. No.56 of 1990, which dealt with identical facts and circumstances for the assessment year 1975-76. In that earlier case, the Tribunal had deleted a similar disallowance made under Section 40A(3) even though a gross profit rate was applied. The reasoning for the decision, as indicated by the reference to the prior judgment, is that the Tribunal's finding on the facts and the application of the law were correct. The ratio decidendi is that a disallowance under Section 40A(3) may not be sustainable if the Tribunal has already considered the profit rate and found no reason to disallow the expenditure on that basis, especially when the facts are identical to a prior favorable ruling. The operative direction is that the question referred is answered against the Revenue and in favour of the assessee. No issue was expressly left undecided.

What were the facts?

This is a reference by the Revenue (Commissioner of Income-tax, Amritsar) to the High Court of Punjab and Haryana at Chandigarh, under Section 256(1) of the Income-tax Act, 1961. The reference arises from an order of the Income-tax Appellate Tribunal, Amritsar Bench, pertaining to the assessment year 1976-77. The dispute concerns an addition of Rs. 23,835/- made by the Income-tax Officer and sustained by the Commissioner of Income-tax (Appeals). The Tribunal had deleted this addition. The Tribunal's decision was based on its earlier order for the assessment year 1975-76, where a similar disallowance under Section 40A(3) was made despite the application of a gross profit rate.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in deleting the addition of Rs. 23,835/- made by the Income-tax Officer under Section 40A(3) of the Income-tax Act, 1961 and sustained by the Commissioner of Income-tax (Appeals)? Assessee's contentions: The judgment does not record specific contentions made by the assessee before the High Court. However, the Tribunal's decision, which the High Court upholds, implies that the assessee argued against the disallowance under Section 40A(3). Revenue's contentions: The Revenue, by filing the reference, contended that the Tribunal was not right in law in deleting the addition. The Revenue likely argued that the disallowance under Section 40A(3) was justified based on the facts and circumstances, and the Tribunal's deletion was erroneous.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 256(1)

AI-generated summary — verify with the full judgment below

I.T.R. No.29 of 1990 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.No.29 of 1990 Date of decision: 13.10.2006 The Commissioner of Income-tax, Amritsar ..Applicant through

Dr. N.L.Sharda, Advocate v. M/s Surinder Sugar Store, Amritsar. ..Respondent through Mr. Suvir Sehgal, Advocate CORAM: Hon'ble Mr.Justice Adarsh Kumar Goel Hon'ble Mr.Justice Rajesh Bindal

1.

Whether Reporters of local papers may be allowed to see the judgment ?

2.

To be referred to the Reporters or not ?

3.

Whether the judgment should be reported in the Digest? Rajesh Bindal, J. At the instance of the Revenue, the Income-tax Appellate Tribunal, Amritsar Bench (for short, `the Tribunal') has referred, under Section 256(1) of the Income-tax Act, 1961 (for short, `the Act'), the following question for the opinion of this Court arising out of ITA No. 1372 (ASR)/1979, pertaining to the assessment year 1976-77: “Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in deleting the addition of Rs. 23,835/- made by the Income-tax Officer under Section 40A(3) of the Income-tax Act, 1961 and

The order continues below.

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