COMMISSIONER OF INCOME TAX, LDH. vs. DEE KAY KNITWEARS, LDH.

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ITA/152/2007HC Punjab & HaryanaPHHC01072827200718 July 2013Bench: MR. JUSTICE RAJIVE BHALLA,MR. JUSTICE DR. BHARAT BHUSHAN PARSOON2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that both questions of law were decided against the Revenue and in favour of the assessee. The Court noted that question (i), concerning insurance claims and foreign exchange fluctuation, had been answered against the Revenue in previous appeals (ITA No.165 of 2007 and ITA No.539 of 2008). Similarly, question (ii), regarding the includibility of sales tax in total turnover for Section 80HHC deduction, had also been decided against the Revenue in a prior appeal (ITA No.539 of 2006). Based on the agreement of counsel for both parties that these issues had been settled in those earlier judgments, the High Court answered both questions against the Revenue. The appeal was accordingly dismissed. No issue was expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Ludhiana, filed an appeal before the High Court challenging an order dated August 31, 2006, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-A. The appeal pertains to the assessment year(s) not specified in the judgment. The dispute concerns the deductibility of certain amounts from business profits for the purpose of computing deductions under Section 80HHC of the Income Tax Act. The High Court admitted the appeal on two questions of law. The procedural history indicates that the parties agreed that the questions of law had been decided against the Revenue in other, separately decided appeals.

What were the issues?

The High Court had to decide the following questions of law: 1. Whether the ITAT was justified in holding that insurance claims and exchange rate fluctuations were not 'other receipts' and thus 90% of such receipts could not be reduced from 'profit of business' under clause (baa) of Explanation below Section 80HHC(4C) of the Income Tax Act. 2. Whether the ITAT was correct in holding that sales tax was not includible in total turnover for computing deduction under Section 80HHC of the Income Tax Act, when sales tax was realized as part of sale proceeds. Contentions: Assessee: The judgment does not record specific contentions made by the assessee. However, the agreement of counsel implies the assessee supported the ITAT's order. Revenue: The Revenue contended that insurance claims and exchange rate fluctuations were 'other receipts' and that sales tax should be included in the total turnover for the purpose of Section 80HHC deduction. The Revenue relied on the ITAT's order being incorrect on these points.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 80HHC(4C)

AI-generated summary — verify with the full judgment below

ITA No.152 of 2007 -: 1 :- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.152 of 2007 Date of decision: July 18, 2013. Commissioner of Income Tax-I, Ludhiana ... Appellant v. M/s Dee Kay Knitwears, Ludhiana ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Shri Rajesh Katoch, Advocate, for the appellant. Shri Sunil Kumar Mukhi, Advocate for the respondent. Rajive Bhalla

, J. (Oral): The revenue has filed this appeal challenging order dated 31.8.2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh. The appeal was admitted on the following questions of law:- “(i) Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that insurance claim and exchange rate fluctuation were not in the nature of 'other receipts' and 90% of such receipts could not be reduced from 'profit of business' under clause (baa) of Explanation below Section 80 HHC(4C) of I.T. Act? (ii) Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was correct in holding that the sales tax was not includible in total turnover for computing deduction under section 80HHC of I.T. Act, when the sale tax was realized as a part of sale proceeds of the goods manufactured by the respondent?” Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh

ITA No.152 of 2007 -: 2 :- Counsel for the parties agree that question No.(i), which consists of two parts, namely foreign exchange fluctuation and insurance claim, have been answered against the revenue and in favour of the assessee in ITA No.165 of 2007, Commissioner of Income Tax-I, Ludhiana v. Venus Fabrics, Ludhiana, and ITA No.539 of 2008, Commissioner of Income Tax-I, Ludhiana v. Sarin Industrial Corporation, decided separately vide orders of even date. As regards the second question of law, it is agreed that the question has been decided against the revenue and in favour of the assessee in ITA No.539 of 2006, Commissioner of Income Tax-I, Ludhiana v. Sarin Industrial Corporation, decided vide order of even date passed separately. In view of the agreement between counsel for the parties, questions No.(i) and (ii) are answered against the revenue in terms of orders of even date passed separately in ITA No.562 of 2007 and ITA No.539 of 2006 against the revenue and in favour of the assessee. The appeal is accordingly dismissed.

[ Rajive Bhalla ]

Judge

[Dr. Bharat Bhushan Parsoon] July 18, 2013. Judge kadyan Kadyan Vinod Kumar 2013.09.25 10:33 I attest to the accuracy and integrity of this document Chandigarh

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