COMMISSIONER OF INCOME TAX vs. MSIND.SPHINX PRECISION LTD.

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ITA/15/2008HC Himachal PradeshHPHC01000281200813 January 2012Author: HONOURABLE MR. JUSTICE RAJIV SHARMA,HONRABLE MR. JUSTICE R.B. MISRA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the substantial question of law raised in all the appeals was no longer res integra. This was in view of the law laid down by the Hon'ble Supreme Court in the case of Ajanta Pharma Limited versus Commissioner of Income Tax-9, Mumbai, (2010) 9 Supreme Court Cases 455. Consequently, the High Court disposed of all the appeals in terms of the Supreme Court's decision. The specific reasoning of the ITAT or the High Court's application of the Ajanta Pharma judgment to the facts of this case, beyond stating it was binding, is not detailed. The operative direction was to dispose of the appeals, implying they were decided in line with the Supreme Court precedent.

What were the facts?

These are five appeals (ITAs No. 2, 15, 17, 23 & 24 of 2008) filed by the Commissioner of Income Tax, Shimla, against M/s Ind. Sphinx Precision Ltd. The appeals challenge an order passed by the Income Tax Appellate Tribunal (ITAT). The core issue revolves around the computation of book profits under Section 115JB of the Income Tax Act, 1961, specifically concerning deductions allowable under clause (iv) of the Explanation to that section. The appeals were consolidated for a common judgment due to identical questions of law and fact.

What were the issues?

1. Whether the ITAT was correct in holding that the deduction allowable under clause (iv) of the Explanation to Section 115JB of the Income Tax Act, in determining book profits, is to be computed on the basis of the book profits and not on the basis of profits computed under the provisions of the Act, without appreciating the express language of the provision that requires computation of deduction in accordance with specific provisions of Section 80HHC and in accordance with the provisions of the Act? Assessee's Contention: Not recorded. Revenue's Contention: The revenue, through its counsel, argued that the ITAT's interpretation was incorrect. They contended that the deduction under clause (iv) of the Explanation to Section 115JB should be computed in accordance with the specific provisions of Section 80HHC and the general provisions of the Act, not solely based on book profits.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 80HHC

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA ITAs No.2,15,17,23 & 24 of 2008 Reserved on : December 9, 2011. Date of decision : January 13, 2012 ITA No.2 of 2008 Commissioner of Income Tax, Shimla …Appellant. Versus M/s Ind. Sphinx Precision Ltd., Plot No.28, Sector 5, Parwanoo. Through its Managing Director Shri Sunil Taneja. …Respondent. ITA No.15 of 2008 Commissioner of Income Tax, Shimla …Appellant. Versus M/s Ind. Sphinx Precision Ltd., Plot No.28, Sector 5, Parwanoo. Through its Managing Director Shri Sunil Taneja. …Respondent. ITA No.17 of 2008 Commissioner of Income Tax, Shimla …Appellant. Versus M/s Ind. Sphinx Precision Ltd., Plot No.28, Sector 5, Parwanoo. Through its Managing Director Shri Sunil Taneja. …Respondent. ITA No.23 of 2008 Commissioner of Income Tax, Shimla …Appellant. Versus M/s Ind. Sphinx Precision Ltd., Plot No.28, Sector 5, Parwanoo. Through its Managing Director Shri Sunil Taneja. …Respondent. ITA No.24 of 2008 Commissioner of Income Tax, Shimla …Appellant. Versus M/s Ind. Sphinx Precision Ltd., Plot No.28, Sector 5, Parwanoo. Through its Managing Director Shri Sunil Taneja. …Respondent. …2… Coram The Hon’ble Mr. Justice R.B. Misra, Judge. The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 For the Appellant : Mr. Vinay Kuthiala, Advocate. For the Respondents : Mr. M.M. Khanna, Senior Advocate, with Mr. Vayur Gautam, Advocate. Rajiv Sharma, Judge Since common questions of law and facts are involved in all the appeals, the same were taken up together and are being disposed of by a common

judgment.

2.

Following common substantial question of law was framed in all these appeals:

Whether the ITAT was correct in holding that the deduction allowable under clause (iv) of the Explanation to Section 115JB of the Income Tax Act inn determining book profits, is to be computed on the basis of the book profits and not on the basis of profits computed under the provisions of the Act, without appreciating the express language of the provision that requires computation of deduction in accordance with specific provisions of Section 80HHC and in accordance with the provisions of the Act?

3.

It is jointly represented by the learned counsel appearing on behalf of the parties that the substantial question of law raised in these appeals is no more res integra, in view of the law laid down by their Lordships of Whether reporters of the local papers may be allowed to see the judgment?

…3…

the Hon’ble Supreme Court in Ajanta Pharma Limited versus Commissioner of Income Tax-9, Mumbai, (2010) 9 Supreme Court Cases 455. Consequently, all the appeals are disposed of.

( R.B. Misra ), J.

January 13, 2012(sd)

( Rajiv Sharma ), J

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