PR. COMMISSIONER OF INCOME TAX, UDAIPUR vs. M/S P.I. INDUSTRIES LTD.

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ITA/78/2017HC Rajasthan08 July 2019Author: S. RAVINDRA BHAT, PUSHPENDRA SINGH BHATI2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court admitted the appeal and framed specific questions of law for determination. The judgment indicates that the ITAT had previously dismissed the department's appeal, confirming the decision of the CIT(A) in deleting certain additions and disallowances. Specifically, the ITAT had allowed a deduction under Section 80-IA, deleted an addition made by the AO for apportioning expenses and depreciation between HO and CPP, and deleted a disallowance under Section 40(a)(ia) for non-deduction of tax at source on payments to a subsidiary. The High Court has not yet ruled on the merits of these issues; it has only admitted the appeal and framed the questions of law. The operative directions are to issue notice and list the matter for hearing along with other related appeals. No specific finding or ratio decidendi has been established by the High Court in this order, as it is an admission order.

What were the facts?

This case involves an appeal by the Principal Commissioner of Income Tax, Udaipur (the Revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The assessee is M/s P.I. Industries Ltd. The appeal concerns assessment years not explicitly stated in the provided text. The Revenue challenges the ITAT's decision to allow a deduction under Section 80-IA of the Income Tax Act, 1961, to the assessee for its Captive Power Plant. The Revenue also contests the ITAT's deletion of an addition made by the Assessing Officer (AO) concerning the apportionment of expenses and depreciation for the Head Office (HO) and Captive Power Plant (CPP). Furthermore, the Revenue disputes the ITAT's deletion of a disallowance made by the AO under Section 40(a)(ia) for failure to deduct tax at source on payments made for professional and technical services to a subsidiary, P.I. Japan Co. Ltd.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether the assessee company is eligible for a deduction of Rs. 1,07,68,807/- under Section 80-IA of the Income Tax Act, 1961, despite there being no real income from the Captive Power Plant and no profit from it being included in the gross total income? 2. Whether the ITAT was legally justified in dismissing the department's appeal and confirming the CIT(A)'s decision to delete an addition of Rs. 29,22,605/-, made by the AO, after holding that the AO was not justified in reducing the claim of deduction under Section 80-IA by apportioning the expenses/depreciation of HO and CPP? 3. Whether the ITAT was justified in deleting the disallowance of Rs. 2,19,54,802/- made by the AO under Section 40(a)(ia) of the Income Tax Act, ignoring the fact that the assessee failed to deduct tax as per Section 195 on payments made for professional and technical services to P.I. Japan Co. Ltd., a 100% subsidiary? Assessee's contentions are not recorded in the provided text. The Revenue's arguments are implicitly presented through the framing of the questions of law, challenging the ITAT's findings on the eligibility for deduction under Section 80-IA, the apportionment of expenses, and the disallowance under Section 40(a)(ia) for non-deduction of TDS.

Which sections of the Income-tax Act were involved?

Section 80-IA,Section 40(a)(ia),Section 195

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 78/2017 Pr. Commissioner Of Income Tax, Udaipur. ----Appellant Versus M/s P.i. Industries Ltd., Post Box No. 2, Udai Sagar Road, Udaipur. ----Respondent For Appellant(s) : Mr. KK Bissa For Respondent(s) : HON'BLE THE CHIEF JUSTICE S. RAVINDRA BHAT HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

Order 08/07/2019 Admit. Issue notice, returnable in six weeks.

The following questions of law arises in the present matter:- ‘(a) Whether on the facts and in the circumstances of the case, the Tribunal has been justified in holding that the assessee company is eligible for deduction of Rs. 1,07,68,807/- u/s 80IA of the I.T. Act, 1961 despite there being no real income from Captive Power Plant, Panoli, Distt. Bharuch, Gujrat and no profit there from having been included in the gross total income ? (b) Whether on the facts and in the circumstances of the case, the learned ITAT was legally justified in dismissing the appeal of the department and confirming the decision of CIT (A) deleting the addition of Rs. 29,22,605/- made by the AO after holding that the AO was not justified in reducing the claim of deduction under (Uploaded on 09/07/2019 at 12:57:45 PM) (Downloaded on 28/10/2026 at 12:50:43 AM) (2 of 2) [ITA-78/2017] Section 80 IA of the act by apportioning the expenses/ depreciation of HO and CPP? ( C ) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in deleting the disallowance of Rs. 2,19,54,802/- made by the AO u/s 40 (a) (1a) of the I.T. Act ignoring the fact that the assessee has failed to deduct tax as per the provisions of section 195 of the I.T. Act on payment made for professional and technical services to P.I. Japan Co. Ltd., 100/% subsidiary of assessee company?”

List alongwith DB Income Tax Appeal Nos. 104/2014, 13/2013 and 77/2017 on 02.9.2019. (DR. PUSHPENDRA SINGH BHATI),J (S. RAVINDRA BHAT),CJ 17-/-ns.

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