M/S SHIVOM COTSPIN LIMITED vs. PRINCIPAL COMMISSIONER OF INCOME TAX

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ITA/5/2018HC Himachal PradeshHPHC01002637201819 March 2018Author: HONOURABLE MR. JUSTICE SANJAY KAROL, THE ACTING CHIEF JUSTICE,HON'BLE MR. JUSTICE AJAY MOHAN GOEL3 pages
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What did the High Court hold?

The High Court answered the three substantial questions of law. Regarding the first question on entitlement to benefits of deduction under Section 80IC, the Court held that the matter is squarely covered by its own prior judgment in M/s Stovekraft India V. Commissioner of Income Tax, and the entitlement will be decided by the Assessing Officer. For the second question concerning deduction for duty drawback and interest accrued thereon under Section 80IC, the Court held against the assessee, finding the matter squarely covered by the Supreme Court's decision in Pandian Chemicals Ltd. vs. Commissioner of Income Tax. For the third question regarding deduction of interest accrued on late payments, the Court held in favour of the assessee, stating the issue is no longer res integra and stands decided by the Supreme Court in Commissioner of Income Tax vs. Govinda Choudhury and sons, as well as a co-ordinate bench of the High Court in Commissioner of Income Tax vs. Jai Prakash Hydro Power Ventures Ltd. The appeal was disposed of accordingly.

What were the facts?

This appeal by M/s Shivom Cotspin Limited (the appellant) is against the order of the Principal Commissioner of Income Tax (the respondent). The appeal concerns assessment years not specified in the judgment. The core of the dispute revolves around the appellant's entitlement to deductions under Section 80IC of the Income Tax Act, 1961, for specific types of income. The procedural history indicates that the High Court is considering substantial questions of law arising from a prior assessment or appellate order. The judgment does not specify the amount in dispute.

What were the issues?

The High Court was asked to decide three substantial questions of law: 1. Whether the appellant is entitled to benefits of deduction under Section 80IC of the Income Tax Act, 1961. 2. Whether the appellant is entitled to deduction under Section 80IC of the Act in respect of income received as duty drawback and interest accrued thereon. 3. Whether the appellant is entitled to deduction of interest accrued in respect of late payment by debtors. Assessee's contentions: For issue 1, the assessee's entitlement to deduction under Section 80IC will be decided by the Assessing Officer, as indicated by the court's reference to a previous judgment. For issue 2, the assessee's entitlement to deduction for duty drawback and accrued interest is implicitly challenged by the revenue. For issue 3, the assessee contends they are entitled to deduction of interest accrued on late payments, supported by Supreme Court and High Court judgments. Revenue's contentions: The revenue's contentions are not explicitly detailed but are implied by the issues framed and the court's findings. For issue 2, the revenue likely argued against the deductibility of duty drawback and accrued interest under Section 80IC, as the court ruled against the assessee citing the Supreme Court in Pandian Chemicals Ltd. For issue 1, the revenue's position is that the Assessing Officer will determine the entitlement.

Which sections of the Income-tax Act were involved?

Section 80IC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

ITA No.5 of 2018

Date of decision : 19.03.2018

M/s Shivom Cotspin Limited

… Appellant

Versus Principal Commissioner of Income Tax

….Respondent

Coram:

The Hon’ble Mr. Justice Sanjay Karol, Acting Chief Justice.

The Hon’ble Mr. Justice Ajay Mohan Goel, Judge.

Whether approved for reporting?1

For the Appellant : Mr. Vishal Mohan, Advocate.

For the Respondent : Mr. Vinay Kuthiala, Senior Advocate with Mr. Diwan Singh Negi, Advocate.

Sanjay Karol, Acting Chief Justice (Oral)

Primarily, three substantial questions of law arise for consideration in the present appeal. (i) As to whether the appellant is entitled to benefits of deduction under Section 80IC of the Income Tax Act, 1961. (ii) As to whether the appellant is entitled to deduction under Section Whether reporters of Local Papers may be allowed to see the judgment?

…2…

80IC of the Act in respect of the income received as duty drawback and interest accrued thereon. (iii) As to whether the appellant is entitled to deduction of the interest accrued in respect of late payment by the debtors.

2.

Insofar as substantial question of law No.1 is concerned, we are of the considered view, which fact is not disputed, that the matter is squarely covered by the judgment rendered in M/s Stovekraft India V. Commissioner of Income Tax, passed by this Court in ITA No.20 of 2015, decided on 28.11.2017 and the entitlement of the assessee for deduction will be decided by the Assessing Officer.

3.

Insofar as substantial question of law No.2 is concerned, we are of the considered view that the matter is squarely covered by the decision rendered by the Hon’ble Apex Court in Pandian Chemicals Ltd. vs. Commissioner of Income Tax, ITR 2003 (Volume 262) 278, against the assessee.

…3…

4.

Insofar as substantial question of law No.3 is concerned, the same is no longer res integra and stands decided in favour of the assessee in terms of the judgment rendered by the Hon’ble Apex Court in decision rendered by a Co-ordinate Bench of this March 19, 2018 (KS/Purohit)

Judge.

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