C.I.T. PATIALA vs. PB. FIN. CORP.

ITR/90/1987HC Punjab & HaryanaPHHC01012478198719 September 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the matter was covered by its earlier order dated September 2, 2004, in I.T.R. No. 6 of 1985 (The Commissioner of Income-tax, Patiala v. M/s Punjab Financial Corporation, Chandigarh). In that prior decision, the Court observed that no tax was deductible on the portion of the dividend diverted to the State Government, as it was not assessable under the Income-tax Act. The Court found that the entire TDS pertained to the dividend payable to the assessee-Corporation, and the burden of this amount had fallen on the assessee. The Tribunal's view was considered a possible and correct view. The Court further noted that even if the Revenue were to succeed, the balance amount would still be refundable as no tax was deductible on the dividend payable to the State Government, and since the assessee had borne the full burden, any refund would go back to the assessee, rendering the entire exercise futile. Therefore, the question was answered against the revenue and in favour of the assessee.

What were the facts?

This case concerns Income Tax Reference No. 90 of 1987, decided on September 19, 2006, by the High Court of Punjab and Haryana at Chandigarh. The reference arose from an order dated March 31, 1986, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in I.T.A. No. 252/Chandi/84, pertaining to assessment year 1979-80. The applicant was the Commissioner of Income Tax, Patiala, and the respondent was The Punjab Financial Corporation, Chandigarh. The core of the dispute involved the credit of tax deducted at source (TDS) in respect of dividends earned by the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing credit for tax deducted at source in respect of dividends earned by the State Government to the assessee? The revenue contended that the ITAT was correct in allowing credit for TDS on dividends. The assessee's position, as reflected in the subsequent High Court decision, was that no tax was deductible on the portion of dividend diverted to the State Government as it was not assessable under the Income-tax Act. The entire tax deducted at source pertained to the dividend payable to the assessee, and the burden of this amount had fallen on the assessee-Corporation.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.90 of 1987 Date of decision: 19.09.2006 The Commissioner of Income Tax, Patiala. -----Applicant Vs. The Punjab Financial Corporation, 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. -----

ORDER: 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 31.03.1986 in I.T.A. No.252/Chandi/84 in respect of assessment year 1979-80:- “Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing credit tax deduction at source in respect of dividends earned by the State Government to the assessee”? We find that the matter is covered by earlier order of this Court dated 2.9.2004 in I.T.R. No.6 of 1985 ‘The Commissioner of Income-tax, Patiala v. M/s Punjab Financial Corporation, Chandigarh , wherein, it was observed:-

I.T.R. No.90 of 1987 “From a perusal of the order of the Tribunal, it is clear that no tax was deductible at all the on the portio

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

Recent GST High Court judgments

Search GST case law →