C I T, LUDHIANA vs. M/S ROCKMAN CYCLE INDUSTRIES, LUDHIANA

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ITR/169/1996HC Punjab & HaryanaPHHC01034974199625 April 2016Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE A.N. JINDAL,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the learned counsel for the appellant-revenue submitted that in view of Circular No. 21/2015 dated 10.12.2015 read with Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by the Central Board of Direct Taxes, he did not wish to press the present references as the tax effect involved was less than ` 20 lacs. The revenue prayed for liberty to file an application for revival of the references if something survived therein. The Court dismissed the references as not pressed with liberty as prayed for. It was clarified that the withdrawal of the references by the revenue shall not be taken as an affirmation of the order of the Tribunal on merits. The legal issue as claimed by the revenue was left open to be adjudicated in an appropriate case. No finding was given on the merits of the substantial question of law.

What were the facts?

The Commissioner of Income Tax (Central), Ludhiana (the revenue) filed these references before the High Court of Punjab and Haryana at Chandigarh. The references arise from RA Nos. 95 and 96/Chandi/1995, which in turn stem from I.T.A. Nos. 70 and 93/Chandi/1990. The assessment year in question is 1986-87. The dispute concerns the Income Tax Appellate Tribunal's decision allowing interest claimed by the assessee, M/s Rockman Cycle Industries Private Limited, Ludhiana, at a higher rate on borrowings, despite the investment being made in shares of a sister-concern that yielded a fixed return. The revenue challenged this before the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing interest claimed by the assessee at a higher rate on the borrowings though the investment had been made by the assessee in the shares of a sister-concern which gave a fixed return of income? (Question of law). The revenue contended that the Tribunal erred in allowing interest at a higher rate on borrowings when the investment was in shares of a sister-concern yielding a fixed return. The assessee's arguments are not recorded in the judgment. The revenue relied on Circular No. 21/2015 dated 10.12.2015 and Circular No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by the Central Board of Direct Taxes, to withdraw the references.

AI-generated summary — verify with the full judgment below

ITR No. 169 of 1996 (O&M) and -1- ITR No.170 of 1996 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 169 of 1996 (O&M) and ITR No.170 of 1996 (O&M) Date of Decision: 25.04.2016 The Commissioner of Income Tax (Central), Ludhiana .......Appellant Versus M/s Rockman Cycle Industries Private Limited, Ludhiana ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Mr. Zora Singh Klar, Advocate for the appellant. Mr. Alok Mittal, Advocate for the respondent. RAJESH BINDAL,J. This reference has been filed in RA Nos. 95 and 96/Chandi/1995 arising out of I.T.A. Nos. 70 and 93/Chandi/1990, for the assessment year 1986-87, raising the following substantial question of law: (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing interest claimed by the assessee at a higher rate on the borrowings though the investment had been made by the assessee in the shares of a sister-concern which gave a fixed return of income? REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

ITR No. 169 of 1996 (O&M) and -2- ITR No.170 of 1996 (O&M) Learned counsel for the appellant-revenue submitted that in view of circular No.21/2015 dated 10.12.2015 read with circular No.279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by Central Board of Direct Taxes, he does not wish to press the present references as the tax effect involved is less than ` 20 lacs. However, he prays that liberty be granted to the revenue to file an application for revival of the references in case something survives therein. Dismissed as not pressed with liberty as prayed for. It is however, clarified that withdrawal of the references by the revenue shall not be taken as affirmation of order of the Tribunal on merits. The legal issue as claimed by the revenue is left open to be adjudicated in an appropriate case. A copy of this order be placed on the file of connected case. (RAJESH BINDAL)

JUDGE (HARINDER SINGH SIDHU) 25.04.2016 JUDGE reema REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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