COMMISSIONER OF INCOME TAX vs. M/S VARDHMAN POLYTEX LTD

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ITA/44/2004HC Punjab & HaryanaPHHC01051563200420 February 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What did the High Court hold?

The High Court, in its judgment dated 21.01.2008, decided the substantial question of law in favour of the Revenue and against the assessee. The Court referred to a separate judgment delivered on the same day in a related case, Commissioner of Income Tax-I, Ludhiana v. M/s Vardhman Polytex Limited, ITA No. 1 of 2003. While the specific reasoning from that judgment is not detailed in this extract, the outcome indicates that the High Court found the Revenue's arguments persuasive. Consequently, the ITAT's deletion of the interest addition was overturned. The operative direction was to dispose of the appeal in accordance with the decision in the related case, implying that the addition made by the Revenue would be upheld.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Ludhiana, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'B'. The ITAT's order, dated 20.8.2003, pertained to Income Tax Appeal Nos. 657/Chandi/97 and 710/Chandii/97 for the assessment year 1993-94. The appeal challenges the ITAT's deletion of an addition of Rs. 1,03,93,864/- made on account of interest. The High Court was asked to determine if the ITAT was justified in deleting this addition by ignoring Explanation 8 to Section 43(1) of the Income Tax Act.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the addition of Rs. 1,03,93,864/- on account of interest by ignoring Explanation 8 to Section 43(1) of the Income Tax Act, 1961? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee before the High Court. Revenue's Contentions: The Revenue contended that the ITAT was not justified in deleting the addition of Rs. 1,03,93,864/- on account of interest, arguing that the Tribunal erred by ignoring Explanation 8 to Section 43(1) of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 43(1)

AI-generated summary — verify with the full judgment below

Income Tax Appeal No. 44 of 2004 1 In the High Court of Punjab and Haryana at Chandigarh Income Tax Appeal No. 44 of 2004 Date of Decision: 21.01.2008 Commissioner of Income Tax-I, Ludhiana. …Appellant. VERSUS M/s Vardhman Polytex Limited, Chandigarh Road, Ludhiana. …Respondent. CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE M.M.KUMAR HON’BLE MR. JUSTICE RAJESH BINDAL Present: Mr. S.K.Garg Narwana, Advocate for the appellant. Mr. M.S.Syali, Senior Advocate with Mr. Satyen Sethi, Mr. Akshay Bhan and Ms. Mahua C. Kalra, Advocates for the respondent. RAJESH BINDAL, J.

The revenue has approached this Court by filing the instant appeal under Section 260-A of the Income Tax Act, 1961 against the order of In- come Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh, passed in I.T.A. No. 657/Chandi/97 and I.T.A. No. 710/Chandii/97 dated 20.8.2003 in respect of assessment year 1993-94. It is claimed that the following substantial question of law would arise for determination of this Court:-

Income Tax Appeal No. 44 of 2004 2 “Whether on the facts and circumstances of the case, the Hon’ble Income Tax Appellate Tribunal was justified in delet- ing the addition of Rs. 1,03,93,864/- on account of interest by ignoring Explanation 8 to Section 43(1)?”

For the detailed reasons stated in our separate judgment delivered today in Commissioner of Income Tax-I, Ludhiana v. M/s Vardhman Polytex Limited, Chandigarh Road, Ludhiana I.T.A. No. 1 of 2003, the substantial question of law arising in the present appeal is answered in favour of the revenue and against the assessee.

The appeal is disposed of accordingly. (Rajesh Bindal) Judge (Adarsh Kumar Goel) Judge (M.M.Kumar) Judge January 21, 2008 “DK”

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