M/S MOUNT SHIVALIK BREWERIES LTD. vs. C.I.T.PATIALA

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ITR/62/1991HC Punjab & HaryanaPHHC01024539199115 September 2006Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the question of law referred to it stands covered against the assessee by the judgment of the Hon'ble Supreme Court in Britannia Industries Limited v. Commissioner of Income Tax and another, (2005) 278 ITR 546. The Court noted that the Supreme Court, in its decision, observed that the intention of the Legislature appears to be clear and unambiguous in excluding expenses towards rents, repairs, and maintenance of premises used for guest houses as indicated in sub-section (4) of section 37. The Supreme Court emphasized that when the language of a statute is clear, it should be interpreted literally. The Court also noted that the judgment relied upon by the assessee (South India Viscose Limited) was referred to by the Supreme Court but did not stand approved. Therefore, the question is answered against the assessee and in favour of the revenue. No specific finding on depreciation on furniture and fittings was explicitly separated from the rent of the rest house, but both were implicitly covered by the Supreme Court's ruling on section 37.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning Income Tax Reference (ITR) No. 62 of 1991. The petitioner is M/s Mount Shivalik Breweries Limited, and the respondent is the Commissioner of Income Tax, Patiala. The assessment year in question is 1981-82. The reference arises from an order dated February 26, 1991, passed by the Income Tax Appellate Tribunal, Chandigarh Bench, in RA No. 58/Chandi/91. The core of the dispute revolves around the deductibility of certain expenses claimed by the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and on a true interpretation of section 37 read with sections 30 to 36 of the Income Tax Act, 1961, the Tribunal was right in holding that depreciation allowance on furniture and fittings cannot be allowed as a deduction? (Question of law) 2. Whether, on the facts and in the circumstances of the case and on a true interpretation of section 37 read with sections 30 to 36 of the Income Tax Act, 1961, the Tribunal was right in holding that expenditure incurred on rent of buildings for a rest house cannot be allowed as a deduction? (Question of law) Assessee's Contentions: The assessee relied on the judgment of the Madras High Court in CIT v. South India Viscose Limited, (2003) 259 ITR 107. Revenue's Contentions: The revenue contended that the issue is covered by the judgment of the Hon'ble Supreme Court in Britannia Industries Limited v. Commissioner of Income Tax and another, (2005) 278 ITR 546.

Which sections of the Income-tax Act were involved?

Section 37,Section 30,Section 31,Section 32,Section 36

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No.62 of 1991 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.62 of 1991 Date of decision:15.9.2006 M/s Mount Shivalik Breweries Limited, Village Bhankarpur, District Patiala ...Petitioner v. The Commissioner of Income Tax, Patiala ...Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present: Mr. S.K.Mukhi, Advocate, for the petitioner Dr. N.L.Sharda, Advocate, for the revenue.

JUDGMENT: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 26.2.1991, RA No.58/Chandi/91, in respect of assessment year 1981-82:- “Whether on the facts and in the circumstances of the case and on a true interpretation of section 37 read with sections 30 to 36, the Tribunal was right in holding that depreciation allowance on furniture and fittings and expenditure incurred on rent of buildings for rest house cannot be allowed as a deduction?” We find that the question stands covered against the assessee by judgment of the Hon'ble Supreme Court in Britannia Industries Limited v. Commissioner of Income Tax and another, (2005) 278 ITR

546.

Learned counsel for the assessee relied upon judgment of the Madras High Court in CIT V. South India Viscose Limited, (2003) 259 ITR 107. The said judgment has been referred to by the Hon'be Supreme court and the same does not stand approved. The Hon'ble Supreme Court in ITR No.62 of 1991 2 Britannia Industries Limited's case (supra), observed:- “.....In our view, the intention of the Legislature appears to be clear and unambiguous and was intended to exclude the expenses towards rents, repairs and also maintenance of premises/accommodation used for the purposes of a guest house of the nature indicated in sub-section(4) of section 37. When the language of a statute is clear and unambiguous, the courts are to interpret the same in its literal sense and not to give it a meaning which would cause violence to the provisions of the statute. If the Legislature had intended that deduction would be allowable in respect of all types of buildings/accommodations used for the purposes of business or profession, then it would not have felt the need to amend the provisions of section 37 so as to make a definite distinction with regard to buildings used as guest houses as defined in sub section (5) of section 37 and the provisions of sections 31 and 32 would have been sufficient for the said purpose. The decisions cited by Dr. Pal contemplate situations where specific provision had been made in sections 30 to 36 of the Act and it was felt that what had been specifically provided therein could not be excluded under section 37. The clarification introduced by way of sub-section (5) to section 37 was also not considered in the said case.” In view of above, the question stands answered against the assessee and in favour of the revenue. (Adarsh Kumar Goel) Judge Sept. 15, 2006 (Ajay Kumar Mittal) 'gs' Judge

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