COMMISSIONER OF INCOME TAX vs. M/S AVON CYCLES LTD.

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ITA/580/2006HC Punjab & HaryanaPHHC01075318200620 February 2007Bench: MR. JUSTICE M.M. KUMAR,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it found no merit in the present appeal filed by the revenue. The Court referred to its own earlier decisions in identical matters, specifically I.T.A. No.136 of 2005 (The Commissioner of Income-tax, Patiala v. M/s Groz Backert Asia Ltd.) decided on July 28, 2006, and I.T.A. No.2 of 2004 (The Commissioner of Income Tax, Patiala v. M/s Groz Backert Asia Limited, Chandigarh) decided on October 12, 2006, where appeals filed by the revenue on similar issues were dismissed. Based on the reasoning in those prior judgments, the High Court dismissed the present appeal. The operative direction was the dismissal of the revenue's appeal.

What were the facts?

The revenue, Commissioner of Income Tax, Ludhiana-II, filed an appeal before the High Court of Punjab and Haryana at Chandigarh against the order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-B. The ITAT's order, dated May 26, 2006, pertained to assessment year 2000-01. The dispute involved an addition of Rs. 13,29,841/- made by the Assessing Officer (AO) to the assessee's (M/s Avon Cycles Ltd.) total income. This addition was on account of excise duty on the closing stock of raw material. The Commissioner of Income Tax (Appeals) had deleted this addition, and the ITAT upheld that deletion, relying on a Supreme Court judgment. The High Court noted that similar appeals by the revenue had already been dismissed in earlier cases.

What were the issues?

1. Whether on the facts and in law, the ITAT was legally justified in deleting the addition of Rs.13,29,841/- made by the Assessing Officer in the total income of the assessee, on account of Excise Duty on closing stock of raw material, by applying provisions of section 145A of the Income Tax Act? Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. However, the ITAT had deleted the addition relying on the order passed in the assessee's earlier case for assessment year 1999-2000 and the Supreme Court judgment in Commissioner of Income-Tax v. Indo Nippon Chemicals Co. Ltd. (2003) 261 ITR 275. Revenue's Contention: The revenue contended that the ITAT was not legally justified in deleting the addition made by the AO on account of excise duty on closing stock of raw material by applying Section 145A of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 145A

AI-generated summary — verify with the full judgment below

I.T.A. No.580 of 2006 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

**** I.T.A. No.580 of 2006 Date of Decision:20.2.2007 Commissioner of Income Tax, Ludhiana-II .....Appellant Vs. M/s Avon Cycles Ltd., G.T.Road, Ludhiana .....Respondent CORAM:- HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Mr. Sanjiv Bansal, Advocate for the revenue. **** RAJESH BINDAL, J. The revenue has approached this Court by filing the present appeal seeking to raise the following substantial question of law, on the basis of order passed by the Income Tax Appellate Tribunal, Chandigarh Bench-B, Chandigarh (for short, `the Tribunal') in I.T.A. No.458/Chandi/2005 dated 26.5.2006, in respect of assessment year 2000- 01:- “Whether on the facts and in law, Hon'ble ITAT was legally justified in deleting the addition of Rs.13,29,841/- made by Assessing Officer in the total income of the assessee, on account of Excise Duty on closing stock of raw material, by applying provisions of section 145A of the Income Tax Act?” Briefly the facts are that the Assessing Officer added back Rs. 13,29,841/- in the closing stock of the assessee on account of excise duty thereon. In appeal, the Commissioner of Income Tax (Appeals) (for short, `the CIT(A)') deleted the addition relying upon the order passed in assessee's earlier case for the assessment year 1999-2000. Appeal against the order of CIT(A) was dismissed by the Tribunal further relying upon judgment of Hon'ble the Supreme Court in Commissioner of Income-Tax v. Indo Nippon Chemicals Co. Ltd., (2003) 261 ITR 275. An identical issue has already been gone into by this Court in I.T.A. No.136 of 2005 – The Commissioner of Income-tax, Patiala v. M/s Groz Backert Asia Ltd., 133-135, Industrial Area-I, Chandigarh

I.T.A. No.580 of 2006 -2- decided on 28.7.2006 and I.T.A. No.2 of 2004 – The Commissioner of Income Tax, Patiala v. M/s Groz Backert Asia Limited, Chandigarh decided on 12.10.2006, where the appeals filed by the revenue were dismissed. For the reasons stated in afore-mentioned orders passed by this Court, we do not find any merit in the present appeal. Accordingly, the same is dismissed.

( RAJESH BINDAL) JUDGE February 20, 2007 ( M.M.KUMAR ) renu JUDGE

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