COMMISSIONER OF IT-II, CHD vs. PB STATE IND. DEV. CORP. LLTD, CHD

Income Tax Appeal No. 597 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 597 of 2010 Date of decision: 18.7.2011 Commissioner of Income Tax-I, Chandigarh --- Appellant Versus M/s. Punjab State Industrial Development Corporation Ltd., Chandigarh --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant-Revenue. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the revenue against the order dated 30.11.2009 passed by the Income Tax Appellate Tribunal Chandigarh, Bench ‘B, Chandigarh (in short “the Tribunal”) in ITA No. 732/CHANDI/2009, relating to the assessment year 2005-06.

Income Tax Appeal No. 597 of 2010 2 2. The following substantial questions of law have been claimed for determination of this Court: “ (i) Whether on the facts and circumstances of the case the ITAT was justified in holding that sale of shares by the assessee resulted in capital gains and not Profit & Loss from business when the main business of the asssessee is to provide financial support to various industries/business concerns through investments in equity to earn profit from the same? (ii) Whether on the facts and circumstances of the case the ITAT was justified in holding that project survey expenses should be treated as revenue expenditure where the project survey expenses are in the nature of capital expenditure? (iii) Whether on the facts and circumstances of the case the ITAT was justified in holding that the Udyog Sahayak expenses should be treated as revenue expenditure whereas the Udyog Sahayak expenses are in the nature of capital expenditure? 3. Learned counsel for the revenue fairly conceded that the first two questions i.e.(i) and (ii) referred to above are covered by the decision in Income Tax Reference No.20 of 2000 (The Punjab State Industrial Development Corporation Ltd., Chandigarh vs. The Commissioner of Income Tax) decided on 30.9.2010, whereby the same have been answered by this Court against the Revenue. We, therefore, following the decision aforesaid answer question Nos. (i) and (ii) against the Revenue and in favour of the assessee.

Income Tax Appeal No. 597 of 2010 3 4. The facts, in brief, necessary for adjudication of question No.(iii) as narrated in the appeal briefly may be noticed. The assessing officer made additions on various counts, amounting to Rs. 5,89,70,790/-. The assessee had also debited an amount of Rs. 4,66,909/- under the head Udyog Sahayak expenses and the assessing officer disallowed 50% of the said amount, i.e. Rs. 2,33,455/- and added to the taxable income of the assessee, vide order dated 28.12.2007. 5. The Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, on appeal carried by the assessee deleted the addition on account of disallowance of Udyog Sahayak expenses, on the basis of earlier order of the Tribunal in the case of the assessee and decided the appeal accordingly, vide order dated 27.4.2009. 6. The revenue preferred appeal before the Tribunal. The appeal was dismissed vide the order under appeal. 7. We have heard learned counsel for the revenue and have perused the record. 8. It may be noticed that the issue under question No.(iii) relates to whether the amount incurred on account of Udyog Sahayak expenses was to be treated as revenue expenses or the same were in the nature of capital expenditure. The said expenses had been allowed by observing that expenditure was incurred for providing assistance/ guidance for setting up the industries which was for furtherance of its objectives. The said expense was held to be revenue in nature. The finding recorded by the Tribunal in this behalf has not been shown to be perverse or illegal in any manner. Accordingly, the question under consideration is also answered against the revenue and resultantly, the appeal is dismissed.

Income Tax Appeal No. 597 of 2010 4 (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) July 18, 2011 ACTING CHIEF JUSTICE *rkmalik*