CIT, JALANDHAR V. M/S MAX INDIA LTD.

ITA/557/2010

AI Insights

The case involves appeals by the Commissioner of Income Tax, Jalandhar against Max India Ltd., concerning the allowability of certain expenditures as revenue deductions under the Income Tax Act, 1961. The primary issues revolved around the quashing of orders under Section 263 of the Act, which were initially deemed prejudicial to the interest of the revenue by the Commissioner of Income Tax. The expenditures in question were related to the health care business and payments of non-compete fees. The ITAT had previously set aside these orders, leading to the current appeals. The High Court of Punjab and Haryana examined the consistency of its previous decisions and the decisions of the ITAT across similar cases and years, ultimately deciding in favor of the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 732256 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 16-07-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NEERAJ JAIN
• Assessee Lawyers: RANVIJAYSINGH
• Keywords: Erroneous order; Non-Compete fee; Prejudicial to the interest of the Revenue; Revenue deduction; Health care business
• Section: 263; 265

Judgement Text

"211 IN THE HIGH COURT OF PUNJAB AND HARYANA (1) CIT, Jalandhar M/s Max India Ltd. (2) CIT, Jalandhar M/s Max India Ltd. CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON’BLE MR. JUSTIC Present Mr. Mr. SANJEEV PRAKASH SHARMA 1. These appeals are dealt with together as common question of law and facts are involved in the same. Facts of the case are being taken from ITA-557-2010. IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA Date of Decision: CIT, Jalandhar Vs. Max India Ltd. ITA Date of Decision: CIT, Jalandhar-I, Jalandhar Vs. M/s Max India Ltd. HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON’BLE MR. JUSTICE JAGMOHAN BANSAL Mr. Ranvijay Singh, Sr. Standing Counsel for the appellant Mr. Neeraj Kumar Jain, Advocate for the respondent. *** SANJEEV PRAKASH SHARMA, J.(Oral) These appeals are dealt with together as common question of law and facts are involved in the same. Facts of the case are being taken from 2010. IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-557-2010 (O&M) Date of Decision: 16.07.2024 …Appellant …Respondent ITA-696-2010 (O&M) Date of Decision: 16.07.2024 …Appellant …Respondent HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA E JAGMOHAN BANSAL , Sr. Standing Counsel for the appellant(s). , Advocate for the respondent. , J.(Oral) These appeals are dealt with together as common question of law and facts are involved in the same. Facts of the case are being taken from These appeals are dealt with together as common question of law and facts are involved in the same. Facts of the case are being taken from RAJESH KUMAR 2024.07.22 11:11 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh. ITA-557- 2. While admitting as framed in para No.5 of the appeal were proposed for adjudication by this Court and the same read as follows: I. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order U/s 263 of the Income rightly been held erroneous so far as prejudicial to the interest of the revenue by the learned Commissioner of the Income Tax? II. Whether on the facts and in the circumstances of the case, the Hon’ble Section 263 of the Income Tax Act, 1961 Commissioner of Income Tax, specifically pointed out that expenses made towards the health care business were not related to the business of t no connection with existing business? III. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order passed under Section 263 by the Commissioner of Income issue of disallowance of payment of non was no business need of the assessee company to make such payment? 3. Both the counsels are at regard to allowability of pre healthcare division and non already decided and concluded by the decision of this Court. So far as the decision of the ITAT in setting aside the order passed under Section 265 of the Act, 1961 and allowing expenses made towards healthcare business as revenue deduction, the same was affirmed by this Court in its order dated 08.09.2015 passed in ITA for the year prior to the year in question i.e. AY 2000 [2] -2010 (O&M) While admitting this appeal on 19.09.2010, the questions of as framed in para No.5 of the appeal were proposed for adjudication by this Court and the same read as follows:- I. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order U/s 263 of the Income Tax Act, 1961, when the order passed by the AO has rightly been held erroneous so far as prejudicial to the interest of the revenue by the learned Commissioner of the Income Tax? II. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order passed under Section 263 of the Income Tax Act, 1961 Commissioner of Income Tax, specifically pointed out that expenses made towards the health care business were not related to the business of the assessee being a new business and having no connection with existing business? III. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order passed under Section 263 by the Commissioner of Income issue of disallowance of payment of non was no business need of the assessee company to make such payment? Both the counsels are at ad-idem regard to allowability of pre-operative expenditures for extension of healthcare division and non-compete fee demand as revenue deduction stands already decided and concluded by the decision of this Court. So far as the ion of the ITAT in setting aside the order passed under Section 265 of the Act, 1961 and allowing expenses made towards healthcare business as revenue deduction, the same was affirmed by this Court in its order dated 08.09.2015 passed in ITA-426-2010 for the assessment year 1999 for the year prior to the year in question i.e. AY 2000 on 19.09.2010, the questions of law as framed in para No.5 of the appeal were proposed for adjudication by this I. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order U/s 263 of Tax Act, 1961, when the order passed by the AO has rightly been held erroneous so far as prejudicial to the interest of the revenue by the learned Commissioner of the Income Tax? II. Whether on the facts and in the circumstances of the case, the ITAT is right in law in quashing the order passed under Section 263 of the Income Tax Act, 1961, when the learned Commissioner of Income Tax, specifically pointed out that expenses made towards the health care business were not related he assessee being a new business and having no connection with existing business? III. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order passed under Section 263 by the Commissioner of Income Tax on the issue of disallowance of payment of non-compete fee when there was no business need of the assessee company to make such idem that the question of law with operative expenditures for extension of compete fee demand as revenue deduction stands already decided and concluded by the decision of this Court. So far as the ion of the ITAT in setting aside the order passed under Section 265 of the Act, 1961 and allowing expenses made towards healthcare business as revenue deduction, the same was affirmed by this Court in its order dated he assessment year 1999-2000 i.e. for the year prior to the year in question i.e. AY 2000-2001. law as framed in para No.5 of the appeal were proposed for adjudication by this I. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order U/s 263 of Tax Act, 1961, when the order passed by the AO has rightly been held erroneous so far as prejudicial to the interest of II. Whether on the facts and in the circumstances of the case, the ITAT is right in law in quashing the order passed under , when the learned Commissioner of Income Tax, specifically pointed out that expenses made towards the health care business were not related he assessee being a new business and having III. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in law in quashing the order passed Tax on the compete fee when there was no business need of the assessee company to make such that the question of law with operative expenditures for extension of compete fee demand as revenue deduction stands already decided and concluded by the decision of this Court. So far as the ion of the ITAT in setting aside the order passed under Section 265 of the Act, 1961 and allowing expenses made towards healthcare business as revenue deduction, the same was affirmed by this Court in its order dated 2000 i.e. RAJESH KUMAR 2024.07.22 11:11 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh. ITA-557- 4. As regards order passed under Section 263 of the Act, 1961, disallowing payment of non same was examined for 2004 and to other individuals in assessment year 2004 and were deleted by the ITAT and the appeal preferred by the revenue for assessment year 2001 albeit on account of loan tax effect. The High Court in ITA 2013 again held the demand of non deduction vide judgment dated 06.08.2018. 5. Having noticed the aforesaid facts, we are satisfied that issue for assessment year 2000 this Court has consistently reached to the same conclusion in favour of the assessee as noticed hereinabove. 6. In view of the above, we do not find any reason to take view and the appeals are, therefore, found to be without merits and questions of law are accordingly answered in favour of the assessee and we hold that the expenditure was allowable revenue deduction. The decision of the ITAT is upheld and the 7. No costs. 8. All pending misc. application(s) also stand disposed of. 16.07.2024. rajesh 1. Whether speaking/reasoned? 2. Whether reportable? [3] -2010 (O&M) As regards order passed under Section 263 of the Act, 1961, disallowing payment of non-compete fee paid to Mr. Ashwani Windlass, the same was examined for the succeeding assessment year 2001 2004 and to other individuals in assessment year 2004 and were deleted by the ITAT and the appeal preferred by the revenue for assessment year 2001-2002 was dismissed by this Court on 10.09 albeit on account of loan tax effect. The High Court in ITA 2013 again held the demand of non-compete fee to be allowable revenue deduction vide judgment dated 06.08.2018. Having noticed the aforesaid facts, we are satisfied that issue for assessment year 2000-2001 has to be also decided has consistently reached to the same conclusion in favour of the assessee as noticed hereinabove. In view of the above, we do not find any reason to take view and the appeals are, therefore, found to be without merits and questions of law are accordingly answered in favour of the assessee and we hold that the expenditure was allowable revenue deduction. The decision of the ITAT is upheld and the appeals are accordingly dismissed. No costs. All pending misc. application(s) also stand disposed of. (SANJEEV PRAKASH SHARMA) 1. Whether speaking/reasoned? : 2. Whether reportable? : As regards order passed under Section 263 of the Act, 1961, compete fee paid to Mr. Ashwani Windlass, the the succeeding assessment year 2001-2002 to 2003- 2004 and to other individuals in assessment year 2004-2005 to 2006-2007 and were deleted by the ITAT and the appeal preferred by the revenue for 2002 was dismissed by this Court on 10.09.2018, albeit on account of loan tax effect. The High Court in ITA-193 and 195 of compete fee to be allowable revenue Having noticed the aforesaid facts, we are satisfied that the same 2001 has to be also decided by this Court, as has consistently reached to the same conclusion in favour of the In view of the above, we do not find any reason to take different view and the appeals are, therefore, found to be without merits and questions of law are accordingly answered in favour of the assessee and we hold that the expenditure was allowable revenue deduction. The decision of the ITAT appeals are accordingly dismissed. All pending misc. application(s) also stand disposed of. (SANJEEV PRAKASH SHARMA) JUDGE (JAGMOHAN BANSAL) JUDGE : Yes/No : Yes/No As regards order passed under Section 263 of the Act, 1961, compete fee paid to Mr. Ashwani Windlass, the - 2007 and were deleted by the ITAT and the appeal preferred by the revenue for .2018, 193 and 195 of compete fee to be allowable revenue the same , as has consistently reached to the same conclusion in favour of the ent view and the appeals are, therefore, found to be without merits and questions of law are accordingly answered in favour of the assessee and we hold that the expenditure was allowable revenue deduction. The decision of the ITAT RAJESH KUMAR 2024.07.22 11:11 I attest to the accuracy and authenticity of this order/judgment. Punjab & Haryana High Court, Chandigarh. "