COMMISSIONER OF INCOME TAX, LUDHIANA vs. VARDHMAN HOLDINGS LTD.

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ITA/330/2008HC Punjab & HaryanaPHHC01080311200829 March 2016Bench: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as not pressed. The dismissal was granted with liberty to the revenue to file an application for revival of the appeal as prayed for. The Court clarified that the withdrawal of the appeal by the revenue would not be taken as an affirmation of the Tribunal's order on merits. The legal issues raised by the revenue were left open to be adjudicated in an appropriate case. Therefore, no finding was given on the merits of the substantial questions of law regarding the validity of the reopening of assessment or the depreciation claim. The operative direction was the dismissal of the appeal as not pressed, with liberty granted.

What were the facts?

The Revenue (Commissioner of Income Tax-I, Ludhiana) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 31.7.2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A). The appeal pertained to assessment year 1994-95 and concerned the assessee, Vardhman Holdings Ltd. The appeal challenged the Tribunal's decisions regarding the validity of reopening the assessment under Section 147/148 and the denial of a 100% depreciation claim on EYCs. The Revenue's counsel, citing CBDT circulars, stated they did not wish to press the appeal due to a tax effect below ₹20 lacs, but requested liberty to revive it if circumstances changed. The High Court dismissed the appeal as not pressed, granting the requested liberty and clarifying that the dismissal was not an affirmation of the Tribunal's order on merits.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the Income Tax Appellate Tribunal was justified in treating the reopening of assessment under Section 147/148 as invalid, despite the notice under Section 148 being issued with the prior approval of the CIT, as per Section 149(1)(a)(ii) of the Income Tax Act? 2. Whether the Income Tax Appellate Tribunal was justified in holding that the Assessing Officer was not justified in declining the assessee's claim for depreciation at 100% on EYCs, even though each EYC machine worked with a spindle and formed part of the plant and machinery? Contentions: Assessee: No arguments recorded for the assessee in the provided text. Revenue: The Revenue's counsel submitted that in view of CBDT Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part), they did not wish to press the appeal as the tax effect was less than ₹20 lacs. They prayed for liberty to file an application for revival of the appeal if something survived therein.

Which sections of the Income-tax Act were involved?

Section 260A,Section 147,Section 148,Section 149(1)(a)(ii)

AI-generated summary — verify with the full judgment below

ITA No. 330 of 2008 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 330 of 2008 (O&M) Date of Decision: 29.03.2016 Commissioner of Income Tax-I, Ludhiana .......Appellant Versus Vardhman Holdings Ltd. ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Mr. Rajesh Katoch, Advocate for the appellant. RAJESH BINDAL,J. This appeal has been filed under Section 260 A of the Income Tax Act, 1961 (for short 'the Act'), against the order dated 31.7.2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), in ITA No.656/Chandi/2006, for the assessment year 1994-95, raising the following substantial questions of law: (i) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in treating the re-opening of assessment u/s 147/148 as invalid inspite of the fact that the notice u/s 148 was issued with the prior approval of the CIT, which is according to Section 149(1)(a)(ii) of I.T. Act? (ii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that the A.O. was not justified in declining the claim of the assessee for depreciation @ 100% REEMA SAINI 2016.04.04 13:52 I attest to the accuracy and authenticity of this document High Court, Chandigarh

ITA No. 330 of 2008 (O&M) -2- on EYCs inspite of the fact that each EYC machine worked together with spindle and forms part of plant and machinery? Learned counsel for the appellant-revenue submitted that in view of circular No.21/2015 dated 10.12.2015 read with circular No.279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by Central Board of Direct Taxes, he does not wish to press the present appeal, as the tax effect involved is less than ` 20 lacs. However, he prays that liberty be granted to the revenue to file an application for revival of the appeal in case something survives therein. Dismissed as not pressed with liberty as prayed for. It is however, clarified that withdrawal of the appeal by the revenue shall not be taken as affirmation of order of the Tribunal on merits. The legal issue as claimed by the revenue is left open to be adjudicated in an appropriate case. (RAJESH BINDAL)

JUDGE (HARINDER SINGH SIDHU) 29.03.2016 JUDGE reema REEMA SAINI 2016.04.04 13:52 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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