COMMISSIONER OF INCOME TAX -II, CHANDIGARH V. GLAXO SMITHKLINE CONSUMERS, PATIALA and SMITHKLINE BEECHAM CONSUMER HEALTH CARE LTD. (NOW GLAXO SMITHKLINE CONSUMER HEALTH CARE LTD.)

ITA/645/2008

AI Insights

The case involves the Commissioner of Income Tax - II, Chandigarh as the appellant and M/S Glaxo SmithKline Consumers, Patiala and M/S SmithKline Beecham Consumer Health Care Ltd. as respondents. The appeals pertain to several issues including the change in the method of accounting for the valuation of closing stock, deductions related to dividends and industrial undertakings, and the treatment of Excise Duty and Sales Tax in the computation of total turnover for tax deductions. The High Court consolidated the appeals due to the commonality of issues and referenced previous judgments to resolve the disputes.

• Counselvise Citation: [] 140 COUNSELVISE.COM (IT) 832968 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 27-01-2026
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Lakshmi Machine Works
• 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 DHUGGA; VAIBHAV GUPTA; KAVITA
• Keywords: Change in method of accounting; Deduction under Section 80-I; Deduction under section 80HHC; Deduction under section 80M; Deemed interest; Excise Duty; Management expenses; Sales Tax; Total Turnover; Valuation of closing stock
• Section: 80HHC; 260A; 80M; 80-I

Judgement Text

" IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** Date of Decision: 27.01.2026 1. ITA-645-2008 COMMISSIONER OF INCOME TAX -II, CHANDIGARH ...Appellant Versus M/S GLAXO SMITHKLINE CONSUMERS, PATIALA ...Respondent 2. ITA-263-2009 COMMISSIONER OF INCOME TAX -II, CHANDIGARH ...Appellant Versus M/S SMITHKLINE BEECHAM CONSUMER HEALTH CARE LTD. (NOW M/S GLAXO SMITHKLINE CONSUMER HEALTH CARE LTD. ...Respondent CORAM:- HON'BLE MR. JUSTICE JAGMOHAN BANSAL HON'BLE MR. JUSTICE AMARINDER SINGH GREWAL Present:- Ms. Urvashi Dhugga, Sr. Standing Counsel Mr. Vaibhav Gupta, Advocate and Ms. Kavita, Advocate for appellant-Income Tax Department Mr. Rohit Jain, Advocate (through V.C.) Mr. Abhishek Sharma, Advocate for Mr. Vishal Gupta, Advocate for the assessee *** JAGMOHAN BANSAL, J. (ORAL) 1. As common issues are involved in the captioned petitions, with the consent of both sides, the same are hereby disposed of by this common order. For the sake of brevity and convenience, facts are borrowed from ITA- 645-2008. 2. 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 31.01.2025 passed by Income Tax Appellate Tribunal, Chandigarh. Printed from counselvise.com DEEPAK BISSYAN 2026.01.28 10:48 I attest to the accuracy and integrity of this document ITA-645-2008; and ITA-263-2009 -2- 3. 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? (ii) Whether on the facts and circumstances of the case, the ITAT is correct in law in holding that proportionate management expenses are to be deducted from gross dividend for the purpose of deduction under Section 80M of 1961 Act? (iii) 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? (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 Printed from counselvise.com DEEPAK BISSYAN 2026.01.28 10:48 I attest to the accuracy and integrity of this document ITA-645-2008; and ITA-263-2009 -3- 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? (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? 4. Learned counsel for the parties are ad idem that questions No.1 to 5 stand covered by order dated 27.11.2025 passed by this Court in ITR No.62 to 65 of 1995 and order dated 19.01.2026 passed in ITA-269-2009. Question No.6 stands settled by Hon’ble Supreme Court in “CIT Vs. Lakshmi Machine Works”, [2007] 160 Taxman 404 (SC) against the Revenue. 5. Questions No.1 to 5 stand answered in terms of order dated 27.11.2025 passed in ITR No.62 to 65 of 1995 and order dated 19.01.2026 passed in ITA-269-2009 by this Court and question No.6 stands answered in terms of Lakshmi Machine Works (supra). 6. Disposed of in above terms. 7. Pending application(s), if any, stands disposed of. (JAGMOHAN BANSAL) JUDGE (AMARINDER SINGH GREWAL) JUDGE January 27, 2026 Deepak DPA Whether Speaking/reasoned Yes/No Whether Reportable Yes/No Printed from counselvise.com DEEPAK BISSYAN 2026.01.28 10:48 I attest to the accuracy and integrity of this document "