PR. COMMISSIONER OF INCOME TAX, UDAIPUR vs. M/S P.I. INDUSTRIES LTD.

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ITA/82/2017HC RajasthanRJHC01041007201708 August 2018Bench: PRADEEP NANDRAJOG,DINESH MEHTA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court admitted the appeal and settled six questions of law for consideration. The judgment does not record the ITAT's findings or reasoning on these issues, nor does it provide the ratio decidendi for any of the points. The operative directions are not specified, as the High Court has only admitted the appeal and framed the questions of law. The judgment does not mention any issue being left undecided. The specific relief granted or denied by the ITAT, which the High Court is now reviewing, is not detailed in this excerpt. The core of the judgment is the admission of the appeal and the framing of substantial questions of law for adjudication, indicating that the merits of the ITAT's decision are yet to be examined by the High Court.

What were the facts?

This case involves an appeal by the Principal Commissioner of Income Tax, Udaipur (the Revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The assessee is M/s P.I. Industries Ltd. The appeal concerns multiple assessment years, though not explicitly stated. The Revenue challenges the ITAT's decisions on several grounds, including eligibility for deduction under Section 80IA, deletion of additions made by the Assessing Officer (AO) regarding apportionment of expenses and depreciation, deletion of disallowances under Section 40(a)(i) for failure to deduct tax, deletion of additions under Section 80IB(4), deletion of disallowances under Section 14A read with Rule 8D, and deletion of additions on account of gain on outstanding forward exchange contracts. The respondent (assessee) was served but did not appear before the High Court.

What were the issues?

The High Court was called upon to decide six questions of law. 1. Whether the ITAT was justified in holding the assessee eligible for a deduction of ₹3,39,56,730/- under Section 80IA, despite no real income from the Captive Power Plant and no profit included in the gross total income? 2. Whether the ITAT was justified in dismissing the department's appeal and confirming the deletion of an addition of ₹37,28,911/- by the CIT(A), holding that the AO was not justified in reducing the Section 80IA deduction claim by apportioning Head Office and Captive Power Plant expenses/depreciation? 3. Whether the ITAT was justified in deleting a disallowance of ₹1,63,09,372/- under Section 40(a)(i), ignoring the assessee's failure to deduct tax under Section 195 on payments for professional and technical services to its subsidiary, P.I. Japan Co. Ltd.? 4. Whether the ITAT was justified in dismissing the department's appeal and confirming the deletion of an addition of ₹2,25,077/- under Section 80IB(4) concerning apportionment of depreciation on common assets for the Jammu Unit? 5. Whether the ITAT was justified in dismissing the department's appeal and confirming the deletion of disallowances of ₹10,24,908/- under Section 14A read with Rule 8D for expenditure incurred to earn exempt income? 6. Whether the ITAT was justified in deleting an addition of ₹58,70,840/- made on account of gain on outstanding forward exchange contracts? The Revenue argued that the ITAT erred in its findings on these issues. The assessee did not present any arguments.

Which sections of the Income-tax Act were involved?

Section 80IA,Section 40(a)(i),Section 195,Section 80IB(4),Section 14A

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN JODHPUR D.B. Income Tax Appeal No. 82/2017 Pr. Commissioner Of Income Tax, Udaipur ----Appellant Versus M/s P.i. Industries Ltd. ----Respondent For Appellant(s) : Mr.K.K.Bissa Mr.G.S.Chouhan For Respondent(s) : None Present HON'BLE THE CHIEF JUSTICE MR. PRADEEP NANDRAJOG HON'BLE MR. JUSTICE DINESH MEHTA Order 08/08/2018 1. None appears for the respondent inspite of service. 2. The appeal is admitted. 3. The following 6 questions of law are settled to be answered in the appeal:- 1. Whether on the facts and in the circumstances of the case, the Tribunal has been justified in holding that the assessee company is eligible for deduction of ₹3,39,56,730/- u/s 80IA of the I.T. Act, 1961 despite there being no real income from Captive Power Plant, Panoli, Dist Bharuch, Gujarat and no profit therefrom having been included in the gross total income? 2. Whether on the facts and in the circumstances of the case, the learned ITAT was legally justified in dismissing the appeal of the department and confirming the decision of CIT (A) deleting the addition of ₹37,28,911/- made by the AO after holding that the AO was not justified in reducing the claim of deduction under Section

(2 of 2) [ITA-82/2017] 80IA of the Act by apportioning the expenses/depreciation of HO and CPP? 3. Whether on the facts and in the circumstances of the case, the learned ITAT was justified in deleting the disallowance ₹1,63,09,372/- made by the AO u/s 40(a) (i) of the I.T. Act ignoring the fact that the assessee has failed to deduct tax as per provisions of section 195 of the I.T. Act on payment made for professional and technical services to P.I. Japan Co. Ltd., 100% subsidiary of assessee company? 4. Whether on the facts and in the circumstances of the case, the learned ITAT was justified in dismissing the appeal of the department and confirming the decision of CIT(A) in deleting the addition of ₹2,25,077/- made u/s 80IB (4) on account of apportionment of depreciation on common assets for Jammu Unit? 5. Whether on the facts and in the circumstances of the case, the learned ITAT was justified in dismissing the appeal of the department and confirming the decision of CIT(A) in deleting the disallowances of ₹10,24,908/- made u/s 14A r.w.r. 8D on account of expenditure incurred for earning exempt income? 6. Whether on the facts and in the circumstances of the case and in law, the learned ITAT was justified in deleting the addition of ₹58,70,840/- made on account of gain on outstanding forward exchange contract? (DINESH MEHTA),J (PRADEEP NANDRAJOG),CJ Kshama Dixit/39

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