COMM. OF IT. vs. M/S NAHAR SPINNING MILLS

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ITA/151/1999HC Punjab & HaryanaPHHC01038259199909 November 2010Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the substantial question of law was to be answered in favour of the revenue. The learned counsel for the assessee did not dispute that the matter was covered in favour of the revenue by the judgment of the Hon'ble Supreme Court in CIT v. Sterling Foods (1999) 237 ITR 579. Consequently, the appeal filed by the revenue was allowed. The ratio decidendi is that export incentives and cash compensatory assistance are not eligible for deduction under Section 80-I if they are not directly attributable to the manufacturing activities. The operative direction was to allow the appeal, implying the ITAT's order was set aside to the extent it allowed the deduction.

What were the facts?

The Revenue, Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated May 5, 1999, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh. The appeal pertained to Assessment Year 1987-88. The dispute concerned the admissibility of deduction under Section 80-I of the Act on export incentives and cash compensatory assistance. The Revenue challenged the ITAT's upholding of the Commissioner of Income Tax (Appeals) order, which allowed such deductions.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT was right in law in upholding the orders of the learned CIT(A) that deduction under Section 80-I is admissible even on export incentive and cash compensatory assistance, when the receipt of which is not attributable to the conduct of any manufacturing activities by the respondent? Assessee's Contention: The judgment records no specific contentions made by the assessee. The assessee's counsel did not dispute that the matter was covered in favour of the revenue by a Supreme Court judgment. Revenue's Contention: The revenue contended that deduction under Section 80-I should not be admissible on export incentives and cash compensatory assistance if these receipts are not attributable to manufacturing activities.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80-I

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.151 of 1999 Date of decision: 9.11.2010 Commissioner of Income Tax. -----Appellant. Vs. M/s Nahar Spinning Mills Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Rajesh Katoch, Standing Counsel for the appellant. Mr. Sanjay Bansal, Sr. Advocate with Ms. Shaweta Malhotra, Advocate for the respondent. --- ADARSH KUMAR GOEL, J.

This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 5.5.1999 of the Income Tax Appellate Tribunal, Chandigarh in I.T.A. No.1663/Chandi/1991 for the assessment year 1987-88 proposing to raise following substantial question of law:- “Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding Orders of the Ld. CIT(A) that Deduction u/s 80-I is admissible even on the Export Incentive and Cash Compensatory Assistance on Export even though the

I.T.A. No.151 of 1999 receipt of which is not attributable to conduct of any Manufacturing Activities by the Respondent.”

Learned counsel for the assessee does not dispute that the matter is covered in favour of the revenue by judgment of the Hon’ble Supreme Court in CIT v. Sterling Foods (1999) 237 ITR 579. Accordingly, the substantial question of law is answered in favour of the revenue and the appeal is allowed. (ADARSH KUMAR GOEL) JUDGE November 09, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 2

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