THE COMMISSIONER OF IT vs. M/S SAKAY TRADERS

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ITA/530/2005HC Punjab & HaryanaPHHC01069710200501 April 2016Bench: MR. JUSTICE SATPAL,THE TAXING OFFICER2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as not pressed, with liberty granted 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 ITAT's order on merits. The legal issue, as claimed by the revenue, was left open to be adjudicated in an appropriate case. Therefore, the ITAT's decision on the specific issue of allowing expenses on FDR interest for Section 80HHC deduction, estimated at 10% suo motu, was not adjudicated on merits by the High Court.

What were the facts?

The Commissioner of Income Tax, Jalandhar-I (the revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 31.5.2005 passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The appeal pertained to assessment year 1998-99 and concerned M/s Sakay Traders, Jalandhar (the assessee). The core of the dispute revolved around the ITAT's decision to allow expenses incurred on earning interest from Fixed Deposits (FDRs) for the purpose of calculating deduction under Section 80HHC, estimating these expenses at 10% of the interest earned, a point not initially under adjudication before the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in allowing, for the purpose of calculating the deduction under Section 80HHC, the expenses incurred on earning interest on FDRs, estimated by the ITAT suo motu at 10% of such interest when no such issue was under adjudication before them? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee. Revenue's Contentions: The revenue, through its counsel, submitted that in view of CBDT Circular No. 21/2015 dated 10.12.2015 read with Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, it did not wish to press the appeal as the tax effect involved was less than ₹20 lacs. The revenue 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 80HHC

AI-generated summary — verify with the full judgment below

ITA No. 530 of 2005 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 530 of 2005 (O&M) Date of Decision: 01.04.2016 The Commissioner of Income Tax, Jalandhar-I, Jalandhar. .......Appellant Versus M/s Sakay Traders, Jalandhar. ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Mr. Vivek Sethi, Advocate for the appellant. Mr. Alok Mittal, Advocate for the respondent. 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 31.5.2005 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, in ITA No.101(ASR)/2001, for the assessment year 1998-99, raising the following substantial question of law: Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in allowing, for the purpose of calculating the deduction under Section 80HHC, the expenses incurred on earning interest on FDRs, estimated by the ITAT suo moto at 10% of such interest when no such issue was under adjudication before them? REEMA SAINI 2016.04.04 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

ITA No. 530 of 2005 (O&M) -2- 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) 01.04.2016 JUDGE reema REEMA SAINI 2016.04.04 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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