COMMISSIONER OF INCOME TAX V. M/S PUNJAB WOOL COMBERS

ITA/168/2003

AI Insights

The case revolves around the appeal by the Commissioner of Income-Tax-I, Ludhiana against M/s. Punjab Wool Combers Ltd., Ludhiana concerning the assessment year 1991-92. The primary issues were related to the deductions under Section 80-I of the Income-tax Act, 1961, and the treatment of premium payable on redemption of debentures. The Income Tax Appellate Tribunal had earlier reversed the decision of the Commissioner of Income-tax (Appeals), which had upheld the assessing officer's restriction on the deduction under Section 80-I. The Tribunal also directed the allowance of a proportionate deduction for the premium on redemption of debentures, citing a precedent from the Supreme Court in Madras Industrial Investment Corporation Ltd. v. Commissioner of Income Tax. The High Court, upon review, found no substantial questions of law arising from the Tribunal's decision and thus dismissed the appeal.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 719463 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 09-09-2010
• Assessment Year: misc
• Other Referred Cases: Madras Industrial Investment Corporation Ltd. v. Commissioner of Income Tax
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Assessment Year; Closing Stock; Deduction; Disallowance; Income Tax; Rectification; Premium on Redemption of Debenture
• Section: 143(3); 154; 43B; 80HHC; 260A; 143(1)(a); 80-I

Judgement Text

"ITA No. 168 of 2003 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. ITA No. 168 of 2003 Date of Decision: 9.9.2010 Commissioner of Income-Tax-I, Ludhiana ...Appellant Versus M/s. Punjab Wool Combers Ltd., Ludhiana ...Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- PRESENT: Mr. Rajesh Katoch, Advocate for the appellant-Revenue --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act, 1961 (for short “the Act’”) has been filed by the Revenue against the order dated 11.11.2002, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (in short “the Tribunal”) in Income-tax Appeal No. 416/CHANDI/1995, in respect of assessment year 1991-92. Briefly stated the facts of the case are that the respondent- assessee filed its return of income for the assessment year declaring net income at Rs. 2,11,61,340/-. The return was processed under Section 143 (1)(a) on 13.3.1992. The assessing officer made assessment under Section 143(3) on 28.3.1994 on total income of Rs. 2,44,90,456/- by disallowing the following: i) On account of under valuation of closing stock of greese = Rs. 53,810/- ii) On a/c of under valuation of closing Stock of Soft Wool Waste = Rs. 16,09,316/- ITA No. 168 of 2003 -2- iii) Disallowance u/s 43B = Rs. 84,944/- iv) Disallowance u/s 80-I = Rs. 16,58,351/- The order of assessment passed on 28.3.1994 was later on rectified vide order dated 9.8.1994 by the assessing officer vide which net income was assessed at Rs. 2,40,78,132/- whereby as a result of order under Section 154, deduction under Section 80HHC was enhanced to Rs. 4,12,324/-. The assessee preferred appeal before the Commissioner of Income-tax (Appeals) (Central), Ludhiana {in short “CIT(A)”}. The CIT (A) vide order dated 22.3.1995 gave a relief under Section 80-I on Rs. 10,483/-. The assessee filed appeal before the Tribunal raising various grounds and the learned Tribunal on a consideration of the matter, disposed of the appeal of the assessee vide order dated 11.11.2002 (Annexure A-IV) whereby it reversed the order of the CIT(A) whereby the said appellate authority had upheld the action of the assessing officer restricting the deduction under Section 80-I at Rs.69,53,199/- against Rs.86,11,550/- claimed by the assessee in the light of the provisions of sub-sections 8 and 9 of Section 80-I. The Tribunal also directed to allow the relief/proportionate deduction of premium payable on redemption of debenture. It is how the assessee has preferred the present appeal raising the following questions of law for determination by this Court: “1. Whether in the facts and circumstances of the case, the Hon’ble Income-tax Appellate Tribunal was justified in reversing the order of the Commissioner of Income-tax (Appeals) in which CIT(A) upheld the action of the assessing officer restricting the deduction u/s 80-I at Rs.69,53,199/- against Rs.86,11,550/- claimed by the assessee in the light of the provisions of sub-sections 8 ITA No. 168 of 2003 -3- & 9 of Section 80-I? 2. Whether in the facts and the circumstances of the case, the Hon’ble Income-tax Appellate Tribunal was justified in directing the Assessing Officer to allow relief/ proportionate deduction of premium payable on redemption of debenture? 3. Whether deduction may be allowed in respect of a liability which is to be crystallized in subsequent years in view of the terms and conditions attached to such liability? 4. Whether premium payable on debenture after specified period on its redemption can be treated at par with the accrual of interest?” We have heard learned counsel for the appellant and have perused the record. Reg. Question (1) The Tribunal while adjudicating the issue regarding disallowance in terms of provisions of Section 80I(8) and (9) had relied upon its earlier decision in the case of the assessee relating to assessment year 1990-91. In ITR No. 168 of 1996 relating to assessment year 1990- 91, similar question has been answered against the revenue. In view thereof, question (1) proposed by the revenue is answered against the revenue. Reg. Questions (2) to (4) These questions being inter-connected are taken up together. The Tribunal relied upon decision of the Apex Court in Madras Industrial Investment Corporation Ltd. v. Commissioner of Income Tax, (1997) 225 ITR 802 (SC) holding that proportionate deduction of premium payable on redemption of debentures is admissible during the year. Nothing could ITA No. 168 of 2003 -4- be shown that this judgment is not applicable to the facts of the present case. Accordingly, it is held that these are not substantial questions of law. In view of the above, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) September 09, 2010 JUDGE rkmalik/gbs "