THE COMMR. OF INCOME TAX-III LDH. vs. M/S NAHAR SPINNIG MILLS LTD.

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ITA/429/2006HC Punjab & HaryanaPHHC01075149200613 November 2006Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL1 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was identical to a previous decision of the same court dated 22.05.2006 in ITA No.293 of 2005, Commissioner of Income Tax-I, Ludhiana v. M/s Vardhman Polytex Ltd. In that case, the court had ruled that Sales Tax and Central Sales Tax cannot be included in the total turnover of the assessee for computing deduction under Section 80HHC of the Income-tax Act, 1961. Therefore, finding no merit in the present appeal, the High Court dismissed it. The ratio decidendi is that indirect taxes like Sales Tax and Central Sales Tax do not form part of the 'turnover' for the purpose of calculating deduction under Section 80HHC, as they are collected on behalf of the government and not part of the assessee's business income.

What were the facts?

The appeal was filed by the Commissioner of Income Tax-III, Ludhiana (revenue) against the order dated 31.05.2005 of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench “A”. The ITAT had decided ITA No.60/CHANDI/97 concerning assessment year 1994-95. The dispute revolved around the computation of deduction under Section 80HHC of the Income-tax Act, 1961. The revenue challenged the ITAT's decision to exclude Central Sales Tax and Sales Tax from the assessee's total turnover for this purpose. The High Court noted that this issue was identical to one previously decided by it.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was right in law in holding that Central Sales Tax and Sales Tax be excluded from the total turnover of the assessee while computing deduction u/s 80HHC? Assessee's contentions: The judgment does not record any specific contentions made by the assessee. The ITAT's decision, which is under challenge, held that Central Sales Tax and Sales Tax should be excluded from the total turnover for Section 80HHC deduction. Revenue's contentions: The revenue argued that Sales Tax and Central Sales Tax should be included in the total turnover for computing the deduction under Section 80HHC. The revenue has preferred this appeal against the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 80HHC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.429 of 2006 Date of decision: 13.11.2006 The Commissioner of Income Tax-III, Ludhaina. ---Appellant Vs. M/s Nahar Spinning Mills Ltd., Ludhiana. ---Respondent. CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr. S.K. Garg Narwana, Advocate for the revenue. ----- ORDER: This appeal has been preferred by revenue against the order dated 31.05.2005 of Income Tax Appellate Tribunal, Chandigarh Bench “A” in I.T.A. No.60/CHANDI/97 in respect of the assessment year 1994-95 proposing following substantial question of law:- “Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was right in law in holding that Central Sales Tax, and Sales Tax be excluded from the total turnover of the assessee while computing deduction u/s 80HHC?” It has not been disputed that identical issue has been decided by this Court on 22.05.2006 in I.T.A. No.293 of 2005, Commissioner of Income Tax-I, Ludhiana v. M/s Vardhman Polytex Ltd.,Chandigarh Road, Ludhiana, wherein it was held that Sales Tax and Central Sales Tax cannot be included in total turnover of the assessee for computing deduction under Section 80HHC of the Income-tax Act, 1961.

In view of above, we do not find any merit in this appeal and the same is dismissed. ( ADARSH KUMAR GOEL ) JUDGE November 13, 2006 ( RAJESH BINDAL ) ashwani JUDGE

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