THE C.I.T. PATIALA vs. RAJ STEEL ROLLING MILLS
What did the High Court hold?
The High Court held that the question of law referred to it was covered by its previous judgment dated 20.9.2006 in ITR No.118 of 1996 (The Commissioner of Income Tax, Patiala v. M/s. Hindustan Wire Products Limited, Patiala). Following the precedent set in that case, the Court answered the question of law against the revenue and in favour of the assessee. The ratio decidendi would be that expenditure on purchase of components and assembling of machinery qualifies as investment in new plant and machinery for the purpose of Section 32-AB, as per the interpretation established in the cited precedent. The reference was disposed of accordingly, implying the Tribunal's order was upheld.
What were the facts?
The Commissioner of Income Tax, Patiala (Revenue) has filed a reference petition before the High Court of Punjab and Haryana at Chandigarh against the order of the Income Tax Appellate Tribunal, Chandigarh Bench. The assessment year in question is 1987-88. The dispute pertains to the interpretation of Section 32-AB of the Income Tax Act concerning investment in new plant and machinery. The Tribunal, in its order dated 26.5.1993 in ITA No.1241/Chandi/93, held that the amount spent by the assessee, Raj Steel Rolling Mills, on the purchase of components and assembling of machinery constituted the purchase price of the plant for the purpose of Section 32-AB.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the amount spent on the purchase of components and assembling of machinery by the assessee constitutes the purchase price of the plant, when Section 32-AB intends the use of the investment only for purchase of new plant and machinery? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the outcome suggests the assessee's position was aligned with the Tribunal's finding. Revenue's Contention: The Revenue contended that the expenditure on components and assembling should not be considered as the purchase price of new plant and machinery for the purpose of Section 32-AB, as the provision specifically intends investment in the purchase of new plant and machinery.
Which sections of the Income-tax Act were involved?
Section 32-AB
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.314 of 1995 Date of decision:8.11.2006 The Commissioner of Income Tax, Patiala
....Petitioner versus Raj Steel Rolling Mills, Mandi Gobindgarh ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Dr. NL Sharda, Advocate, for the revenue. Mr. Akshay Bhan, Advocate, for the respondent-assessee. JUDGMENT: Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal) arising out of its order dated 26.5.1993 in ITA No.1241/Chandi/93, for the assessment year 1987-88:- “Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the amount spent on the purchase of components and assemblying of machinery by the assessee constitutes the purchase price of the plant, when Section 32-AB intends the use of the investment only for purchase of new plant and machinery?” The question referred is covered by judgment of this Court dated 20.9.2006 in ITR No.118 of 1996 (The Commissioner of Income Tax, Patiala v. M/s. Hindustan Wire Products Limited, Patiala). Accordingly, the question is answered against the revenue and in favour of the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge November 8, 2006 (Rajesh Bindal) 'gs' Judge
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