COMMISSIONER OF INCOME TAX II vs. PUNJAB AGRO FOODGRAINS CORP LTD

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ITA/172/2014HC Punjab & HaryanaPHHC01109300201418 September 2014Bench: MR. JUSTICE DR. RAVI RANJAN,MR. JUSTICE SURINDER GUPTA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that the Revenue's counsel fairly accepted that the Tribunal's decision was based on its own prior order in ITA No.614/Chandi/2008 for assessment year 2005-06. The High Court had, in a separate order of even date, dismissed the Revenue's appeal in ITA No.163 of 2009, which dealt with the aforementioned prior order. Consequently, following that precedent, the present appeal by the Revenue was also dismissed. The specific reasoning of the Tribunal regarding the nature of the land development expenditure as revenue expense was not elaborated upon in this High Court judgment, but it was accepted as having been decided in favour of the assessee in the prior matter.

What were the facts?

The Revenue (Commissioner of Income Tax II, Chandigarh) appealed to the High Court against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'A'. The ITAT had dismissed the Revenue's appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) had deleted an addition of ₹81,21,000 made by the Assessing Officer (AO). The assessee, M/s Punjab Agro Foodgrains Corporation Limited, engaged in farming, claimed expenses of ₹90,21,638 for land development. The AO disallowed ₹81,21,000, treating it as capital expenditure, resulting in an assessment order under Section 143(3) on 31.12.2012. The CIT(A) allowed the assessee's appeal on 5.5.2013, and the ITAT upheld this deletion on 25.10.2013. The assessment years in dispute are 2010-11.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in upholding the decision of CIT(A) in deleting the addition of ₹81,21,000/- made by the AO by treating the land development expenditure as capital in nature as against revenue expenses? (Question of law) Assessee's Contention: Not recorded. Revenue's Contention: The AO correctly treated the land development expenditure as capital in nature, and the CIT(A) and ITAT erred in deleting the addition. The Revenue relied on the AO's assessment order. Tribunal's Reasoning (as per Revenue's appeal): The Tribunal relied on its own prior order in ITA No.614/Chandi/2008 for assessment year 2005-06, which was decided by a separate order of even date.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3)

AI-generated summary — verify with the full judgment below

ITA No.172 of 2014 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH ITA No.172 of 2014 (O&M) Date of decision: 18.9.2014 Commissioner of Income Tax II, Chandigarh ……Appellant Vs. M/s Punjab Agro Foodgrains Corporation Limited …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Ms. Urvashi Dhugga, Advocate for the appellant.

Ajay Kumar Mittal,J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 25.10.2013, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A' (in short, “the Tribunal”) in ITA No.811/Chandi/2008 for the assessment years 2010-11, claiming following substantial question of law:- “Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in upholding the decision of CIT(A) in deleting the addition of ` 81,21,000/- made by the AO by treating the land development expenditure as capital in nature as against revenue expenses? 2. A few facts relevant for the decision of the controversy GURBAX SINGH 2014.11.04 17:50 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.172 of 2014 (O&M) involved as narrated in the appeal may be noticed. The assessee is engaged in the business of farming activities. It had carried out farming activities at the farm situated in Ladhowal and claimed expenses of ` 90,21,638/- for development of land. Assessment was completed under section 143(3) of the Act on 31.12.2012, Annexure A.1 at income of ` 1,13,13,618/- against the returned income of ` 31,92,612/-. Following the order of the earlier years, the Assessing Officer disallowed amount of ` 81,21,000/- out of total expenses of ` 90,21,638/- treating the same as capital expenses. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income tax (Appeals) [CIT(A)]. Vide order dated 5.5.2013, Annexure A.2, the CIT (A) allowed the appeal deleting the addition. Not satisfied with the order, the revenue filed appeal before the Tribunal. Vide order dated 25.10.2013, Annexure A.3, the Tribunal dismissed the appeal. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the appellant-revenue and perused the record. 4. Learned counsel for the revenue fairly accepted that the Tribunal while adjudicating the issue had relied upon its own order in ITA No.614/Chandi/2008 relating to the assessment year 2005-06 against which ITA No.163 of 2009 has been decided today by a separate order. In view of our order of even date passed in ITA No.163 of 2009 whereby appeal of the revenue has been dismissed, the present appeal stands dismissed. (Ajay Kumar Mittal) Judge September 18, 2014 (Fateh Deep Singh) 'gs' Judge

GURBAX SINGH 2014.11.04 17:50 I attest to the accuracy and integrity of this document High Court Chandigarh

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