M/S VARDHMAN TEXTILS LTD. vs. COMMISSIONER OF INCOME TAX, LDH. AND ORS

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision : September 05, 2008 M/S Vardhman Textiles Ltd formerly known as Mahavir Spinning Mills Ltd ...... Appellant. through Mr.Akshay Bhan, Advocate v. Commissioner of Income Tax, Range-I, Ludhiana & others, ...... Respondents CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI * 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? * AJAY TEWARI, J The present appeal proposes the following questions of law :- (i) Whether the action on the part of the respondent authorities for not allowing exemption under Section 10B in respect of profit earned by its manufacturing unit styled as Arihant Spinning Mills (Unit No.2) which got converted into a 100% EOU from DTA unit during assessment year 1995-96 is legally sustainable in the eyes of law ?

ii) Whether the sales tax exemption/incentive received by the company from Punjab Government constitutes capital receipt and should not be taken into account while computing its taxable income ? (iii) Whether in fact and circumstances of the case, the action of the authorities below, the impugned orders Annexures A-1 to A-3 are legally sustainable in the years of law ? On 29.11.1996, the appellant filed its return declaring income of Rs.2,68,39,520/- which was, however, finally assessed at Rs.3,19,10,170/- under Section 143(3) of the Income Tax Act, 1961 (for short “the Act”) by order dated 7.3.1999. Aggrieved thereof an appeal was preferred, whereby some reliefs were granted; expenses being permitted to be considered as revenue expenditure, deductions under Section 80 HHC of the Act and allocation of certain expenses towards dividend income; and with respect to the claims of allowing a sum of Rs.58.33 lacs as revenue expenditure and of considering expenses amounting to Rs.28,57,319/-, the matter was remanded back to the Assessing Authority. The appellant carried the matter in second appeal. The Tribunal granted partial relief by the impugned order in so much as it accepted the claim of the appellant for excluding an amount of Rs.2,18,264/-, under Section 80 1A of the Act. Before us question No.1 is not pressed. In regard to question of No.2 we find that the same is covered against the appellant, in view of the judgment of this Court in Commissioner of Income Tax vs Abhishek Industries, reported as 286 ITR 1. Consequently, finding that no

substantial question of law arises in this case, the present appeal is dismissed with no order as to costs. ( AJAY TEWARI ) JUDGE

( ADARSH KUMAR GOEL )

JUDGE September 05, 2008

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