CIT vs. VARDHMAN SPINNING & GENERAL MILLS LTD

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ITR/119/1997HC Punjab & HaryanaPHHC01035359199731 October 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What did the High Court hold?

The High Court referred to its prior decisions in CIT v. Saraswati Industrial Syndicate Limited, (2001) 257 ITR 779, and The Commissioner of Income Tax, Amritsar v. M/s Deva Singh Sham Singh, Amritsar, ITR No.564 of 1995, decided on 30.10.2006. Based on these precedents, the Court found that the Tribunal was correct in its findings. The ratio decidendi is that issues concerning the allowability of ESA on generators and investment allowance on racks, when treated as part of plant and machinery, have been consistently decided in favour of the assessee by this Court. Consequently, the questions referred were answered against the revenue and in favour of the assessee. The reference was disposed of accordingly.

What were the facts?

This case concerns Income Tax Reference No. 119 of 1997, filed by the Commissioner of Income Tax, Ludhiana (the revenue) against Vardhman Spinning and General Mills Ltd., Ludhiana (the assessee). The assessment year in question is 1983-84. The reference arises from an order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, dated 24.02.1997, in I.T.A. No.77/Chandi/91. The High Court of Punjab and Haryana at Chandigarh was asked to provide its opinion on specific questions of law referred by the Tribunal.

What were the issues?

The Tribunal referred two questions of law for the opinion of the High Court: 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing Extra Shift Allowance (ESA) on a generator? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing investment allowance on racks by treating the same as part and parcel of plant and machinery? The revenue contended that the Tribunal erred in allowing ESA on the generator and investment allowance on racks. The judgment does not record specific arguments from the assessee regarding these issues, nor does it detail the Tribunal's initial reasoning for allowing these claims. However, it notes that the High Court had previously dealt with similar questions in other cases.

Which sections of the Income-tax Act were involved?

Section 10(2)(vi),Section 32A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.119 of 1997 Date of decision: 31.10.2006 Commissioner of Income Tax, Ludhiana. ---Applicant Vs. Vardhman Spinning and General 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: Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 24.02.1997 in I.T.A. No.77/Chandi/91 in respect of assessment years 1983-84:- “1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing ESA on generator and weighing scale?” 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing investment allowance on racks by treating the same as part and parcel of plant and machinery?”

We find that the question has been gone into by this Court in CIT v. Saraswati Industrial Syndicate Limited, (2001) 257 ITR 779 and The Commissioner of Income Tax, Amritsar v. M/s Deva Singh Sham Singh, Amritsar, ITR No.564 of 1995, decided on 30.10.2006. Accordingly, the questions referred are answered against the revenue and in favour of the assessee.

Reference is disposed of accordingly. ( ADARSH KUMAR GOEL ) JUDGE October 31, 2006 ( RAJESH BINDAL ) ashwani JUDGE

I.T.R. No.48 of 1993 Pag e

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