COMMISSIONER OF INCOME TAX vs. M/S VARDHMAN SPINNING AND GEN MILLS LTD

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ITA/45/2004HC Punjab & HaryanaPHHC01051564200429 March 2016Bench: MR. JUSTICE ASHUTOSH MOHUNTA,MR. JUSTICE RAMENDRA JAIN2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as not pressed. The revenue's counsel stated that they did not wish to press the appeal due to the tax effect being below ₹20 lacs, citing CBDT Circulars. The Court granted liberty to the revenue to file an application for revival of the appeal if something survived. It was 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 specific finding was given on the deductibility of the front-end fee or the treatment of expenditure for Section 80-M relief.

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 30.07.2003 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal pertained to assessment year 1992-93 and challenged the ITAT's confirmation of the Commissioner of Income Tax (Appeals) order regarding a deduction on front-end fee and the treatment of expenditure incurred for earning dividend income. The dispute involved the deductibility of expenditure incurred before commercial production and the consideration of expenditure for Section 80-M relief.

What were the issues?

1. Whether, in light of the facts and circumstances, the ITAT erred in confirming the CIT(A)'s order regarding a deduction on front-end fee, considering this expenditure related to the period before commercial production commenced, and whether this expenditure is capital in nature (Section 37 of the Income Tax Act, 1961)? 2. Whether the ITAT correctly ignored expenditure incurred for earning dividend income while allowing relief under Section 80-M, without examining if such expenditure was actually incurred to earn dividend income liable for deduction under Section 80-M (Section 80-M of the Income Tax Act, 1961)? Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The revenue, through its counsel, submitted that in view of CBDT Circular No. 21/2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part), it did not wish to press the appeal as the tax effect was less than ₹20 lacs. The revenue prayed for liberty to revive the appeal if something survived.

Which sections of the Income-tax Act were involved?

Section 260A,Section 37,Section 80M

AI-generated summary — verify with the full judgment below

ITA No. 45 of 2004 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 45 of 2004 (O&M) Date of Decision: 29.03.2016 Commissioner of Income Tax-I, Ludhiana .......Appellant Versus M/s Vardhman Spinning and General Mills 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 30.7.2003 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B), in ITA Nos.712/CHANDI/97 and 658/CHANDI/97, for the assessment year 1992-93 raising the following substantial questions of law: (i) (a) Whether in view of the circumstances and facts of the case, the Hon'ble Income Tax Appellate Tribunal erred in confirming the order of the Commissioner of Income Tax (Appeals) on account of deduction on front end fee though this expenditure pertaining the period before commencement of commercial production? (b) Whether this expenditure is not a capital expenditure? REEMA SAINI 2016.04.04 13:52 I attest to the accuracy and authenticity of this document High Court, Chandigarh

ITA No. 45 of 2004 (O&M) -2- (ii) Whether, the Income Tax Appellate Tribunal is correct in ignoring the expenditure incurred for earning the Dividend Income, while allowing relief u/s 80-M without examining the fact that such expenditure was actually incurred to earn dividend income which was liable to be considered for deduction u/s 80-M? 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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