COMMISSIONER OF INCOME TAX, CHANDIGARH-II V. SMITHKLINE BEECHAM CONSUMER HEALTH CARE LIMITED

ITA/351/2007

AI Insights

The case involves the Commissioner of Income Tax, Chandigarh-II as the appellant, contesting various decisions made by the Income Tax Appellate Tribunal, Chandigarh, regarding M/S Smithkline Beecham Consumer Health Care Limited, the respondent. The primary issues revolved around the methods of accounting for closing stock, the applicability of certain provisions under Section 43B of the Income Tax Act post the Finance Act, 2003, and the eligibility for deductions under Section 80-I and Section 80HHC of the Act. The court referenced several precedents and previous judgments to arrive at its decision, affirming the lower authorities' rulings on the grounds that they were consistent with established legal interpretations and the facts of the case.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 832959 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 29-01-2026
• Assessment Year: misc
• Other Referred Cases: Checkmate Services (P.) Ltd. Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: ROHIT JAIN; ABHISHEK SHARMA; VISHAL GUPTA
• Assessee Lawyers: URVASHI DUGGA; KAVITA
• Keywords: Change in method of accounting; Deduction under Section 80-I; Deemed interest; Excise Duty; Sales Tax; Total Turnover; Valuation of closing stock
• Section: 43B; 80HHC; 260A; 80-I

Judgement Text

" IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** 206 ITA-351-2007 (O&M) Date of Decision: 29.01.2026 COMMISSIONER OF INCOME TAX, CHANDIGARH-II ...Appellant Vs. M/S SMITHKLINE BEECHAM CONSUMER HEALTH CARE LIMITED …Respondent CORAM:- HON'BLE MR. JUSTICE JAGMOHAN BANSAL HON'BLE MR. JUSTICE AMARINDER SINGH GREWAL Present:- Ms. Urvashi Dugga, Advocate with Ms. Kavita, Advocate for the appellant Mr. Rohit Jain, Advocate (through V.C.) and Mr. Abhishek Sharma, Advocate for Mr. Vishal Gupta, Advocate for the assessee *** JAGMOHAN BANSAL, J. (ORAL) 1. The appellant through instant appeal under Section 260A of the Income Tax Act, 1961 (for short ‘1961 Act’) is seeking setting aside of order dated 28.02.2005 passed by Income Tax Appellate Tribunal, Chandigarh. 2. The appellant has raised following questions for adjudication by this Court:- (i) Whether on facts and in the circumstances of the case, the ITAT is right in law in permitting the change in method of accounting with regard to the valuation of closing stock from absorption cost method to direct cost method? Printed from counselvise.com DEEPAK BISSYAN 2026.02.02 10:53 I attest to the accuracy and integrity of this document ITA-351-2007 -2- (ii) Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT (Appeals) in deleting the addition made on account of change in the method of valuation of closing stock in respect of excise duty? (iii) Whether on the facts and in the circumstances of the case the ITAT was right in holding that the restriction imposed by 2nd proviso of section 43B are not applicable in view of the amendments by the Finance Act, 2003 w.e.f. 01.04.2004 and are declaratory in nature and are applicable retrospectively? (iv) Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT(Appeals) in deleting the addition made on account of disallowance of claim for deduction u/s 80-I of the 1961 Act, in as much as the machineries had been installed in the same existing factory premises, as no mention of expansion of the existing factory in the annual report of the company was there and or any separate accounts & other details relating to unit for which deduction u/s 80-I was claimed, were maintained? (v) Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT (A) in deleting the addition made on account of deemed interest from deposits given to the landlords for leased premises hired for the use of certain directors and top employees of the assessee? Printed from counselvise.com DEEPAK BISSYAN 2026.02.02 10:53 I attest to the accuracy and integrity of this document ITA-351-2007 -3- (vi) Whether on the facts and in the circumstances of the case, the ITAT was right in holding that Excise Duty and Sales Tax will not form part of ‘total turnover’ while computing deduction under Section 80HHC? 3. Learned counsel for the parties are ad idem that question No.1 and 2 stand answered by this Court vide order dated 27.11.2025 passed in ITR No.62 to 65 of 1995. Question No.3 stands settled against assessee as per judgment of Hon’ble Supreme Court “Checkmate Services (P.) Ltd. Vs. CIT”, [2022] 448 ITR 518 (SC). Questions No.4 and 5 stand answered in favour of assessee vide order dated 19.01.2026 passed by this Court in ITA- 269-2009. Question No.6 stands answered in favour of assessee vide order dated 27.01.2026 passed by this Court in ITA-645-2008. 4. Disposed of in above terms. 5. Pending application(s), if any, stands disposed of. (JAGMOHAN BANSAL) JUDGE (AMARINDER SINGH GREWAL) JUDGE January 29, 2026 Deepak DPA Whether Speaking/reasoned Yes/No Whether Reportable Yes/No Printed from counselvise.com DEEPAK BISSYAN 2026.02.02 10:53 I attest to the accuracy and integrity of this document "