COMMISSIONER OF INCOME TAX vs. MACK HOSIERY

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ITA/618/2007HC Punjab & HaryanaPHHC01073334200701 December 2011Bench: MR. JUSTICE GURMEET SINGH SANDHAWALIA2 pages
AI SummaryAllowed

What did the High Court hold?

The Punjab and Haryana High Court allowed the appeal filed by the Revenue. The Court held that the substantial question of law raised by the Revenue was concluded by the judgment of the Hon'ble Supreme Court in Liberty India Vs. Commissioner of Income Tax (2009) 317 ITR 218(SC). The Supreme Court's decision was in favour of the Revenue and against the assessee. Consequently, the High Court decided the substantial question of law in favour of the Revenue and against the assessee, implying that the duty drawback of Rs. 15,04,103/- was not eligible for deduction under Section 80IB of the Income Tax Act, 1961. The operative direction was to allow the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Ludhiana, filed an appeal before the Punjab and Haryana High Court against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT's order, dated June 30, 2006, in ITA No. 162/Chandi/2005, pertained to the assessment year 2001-02. The dispute involved the eligibility of duty drawback amounting to Rs. 15,04,103/- for deduction under Section 80IB of the Income Tax Act, 1961. The ITAT had held that this duty drawback was profit derived from an industrial undertaking and thus eligible for deduction. The Revenue challenged this finding.

What were the issues?

1. Whether, on the facts and in law, the Income Tax Appellate Tribunal was justified in holding that duty drawback of Rs. 15,04,103/- was 'profit derived from industrial undertaking' entitled to deduction under Section 80IB of the Income Tax Act, 1961? (Question of law) Assessee's contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's order, which is under challenge, held the duty drawback to be eligible for deduction under Section 80IB. Revenue's contentions: The Revenue argued that the duty drawback was not 'profit derived from industrial undertaking' and therefore not eligible for deduction under Section 80IB. The Revenue relied on the judgment of the Hon'ble Supreme Court in Liberty India Vs. Commissioner of Income Tax (2009) 317 ITR 218(SC).

Which sections of the Income-tax Act were involved?

Section 80IB

AI-generated summary — verify with the full judgment below

ITA No. 618 of 2007 -1- IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH ITA No. 618 of 2007 Date of Decision: 1.12.2011 Commissioner of Income Tax-I, Ludhiana ...Petitioner Versus Mack Hosiery (Regd.) ..Respondent CORAM: Hon'ble Mr. Justice Hemant Gupta Hon'ble Mr. Justice G.S. Sandhawalia Present: Mr. Rajesh Katoch, Advocate for the appellant. Mr. Pankaj Jain, Advocate for the respondent. Hemant Gupta, J. The revenue has claimed the following substantial question of law: “Whether on the facts and law, the Hon'ble Income tax Appellate Tribunal was justified in holding that duty drawback of Rs.15,04,103/- was `profit derived from industrial undertaking' entitled to deduction u/s 80IB of I.T.Act, 1961? The said question of law is said to have arisen out of the order passed by the Income Tax Appellate Tribunal vide its order dated 30.6.2006 in ITA No.162/Chandi/2005 for the assessment year 2001-02. Learned counsel for the parties admit that the question raised is concluded by the judgment of Hon'ble the Supreme Court in Liberty India Vs. Commissioner of Income Tax (2009) 317 ITR 218(SC) in favour of the revenue and against the assessee.

ITA No. 618 of 2007 -2- In view of the above, the appeal is allowed. Substantial question of law is decided in favour of the revenue and against the assessee. ( Hemant Gupta )

Judge (G.S. Sandhawalia) 1.12.2011 Judge Meenu

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