COMMISSIONER OF INCOME TAX, LDH. V. M/S NAHAR EXPORTS LTD. LDH.

ITA/164/2007

AI Insights

The case involves an appeal by the Commissioner of Income Tax -III, Ludhiana against M/s Nahar Export Ltd. concerning deductions under Section 80 HHC of the Income Tax Act, 1961 for the Assessment Year 2000-01. The Revenue challenged the Income Tax Appellate Tribunal's decision which favored the assessee on three main issues: the treatment of unabsorbed depreciation, the exclusion of sales tax and central sales tax from total turnover, and the exclusion of service charges of dyeing and knitting from total turnover while computing deductions under Section 80 HHC. The Revenue's counsel conceded that these issues had been previously decided against the Revenue by the Supreme Court and the High Court in similar cases.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 731837 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 10-03-2008
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. Shirke Construction Equipments Ltd., Commissioner of Income Tax-II Vs. Salzer Electronics Ltd., Commissioner of Income Tax Vs. Vardhman Polytex Ltd., Nahar Spinning Mills Ltd. Vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: VIVEK SETHI
• Keywords: Deduction under Section 80 HHC; Unabsorbed depreciation; Sales Tax exclusion; Central Sales Tax exclusion; Service Charges exclusion
• Section: 260A; 80AB; 80 HHC

Judgement Text

"ITA No.164 of 2007 1 In the High Court for the States of Punjab and Haryana at Chandigarh … ITA No.164 of 2007 Date of decision: 10.3.2008 The Commissioner of Income Tax -III,Ludhiana .. Appellant Versus M/s Nahar Export Ltd. .. Respondent Coram: Hon’ble Mr.Justice Satish Kumar Mittal Hon'ble Mr.Justice Rakesh Kumar Garg Present: Mr.Vivek Sethi, Advocate for the appellant-Revenue. Rakesh Kumar Garg,J 1. The Revenue has filed the present Appeal under Section 260A of the Income Tax Act, 1961(for short ‘the Act’) against the order of the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’ Chandigarh dated 31.7.2006 passed in ITA No.293/CHANDI/2003 for the Assessment Year 2000-01 raising the following proposed substantial question of law: - i)Whether on the facts and circumstances of the case, the Hon’ble ITAT was right in law in holding that unabsorbed depreciation of earlier years is not to be reduced from the profits of the business computed for deduction u/s 80 HHC? ii)Whether on the facts and the circumstances of the case, the Hon’ble ITAT was right in law in holding that Sales Tax, and Central Sales Tax be excluded from the total turnover of the assessee while computing deduction u/s 80 HHC? Iii)Whether on the facts and the circumstances of the case, ITA No.164 of 2007 2 the Hon’ble ITAT was right in law in holding that Service Charges of dyeing and knitting be excluded from the total turnover of the assessee while computing deduction u/s 80 HHC? 2. At the outset, Shri Vivek Sethi, Advocate, learned counsel for the Revenue has very fairly stated that question No.1 as raised by the department has already been decided against the Revenue by the judgment of Hon’ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Shirke Construction Equipments Ltd. (2007) 291 I.T.R. 380 (SC), wherein it has been held as under:- “Section 80AB of the Income Tax Act, 1961, specifying that profits are those as determined for the purpose of the Act, will apply for determining profits from export business for the purposes of the deduction under Section 80 HHC. In determining business profits for the deduction under Section 80 HHC the unabsorbed business losses of earlier years under section 72 should be set off.” He has also conceded that the said judgment of the Hon’ble Supreme Court has been further followed by the Hon’ble Madras High Court in the case of Commissioner of Income Tax-II Vs. Salzer Electronics Ltd. decided on 3.7.2007. Mr.Sethi has further conceded that question No.2 has also been answered against the Revenue and in favour of the assessee by a judgment of this Court cited as Commissioner of Income Tax Vs. Vardhman Polytex Ltd. (2006) 203 CTR (P&H) 397. He has also admitted that question No.3 as raised by the Revenue also stands decided by this Court in ITA No.503 of 2007(Nahar Spinning Mills Ltd. Vs. Commissioner of Income Tax) decided on 25.2.2008 against the Revenue and in favour of the assessee. ITA No.164 of 2007 3 In view of the above stand taken by the learned counsel for the Revenue, no substantial question of law survives for determination of this Court. Hence this appeal is dismissed. (RAKESH KUMAR GARG) JUDGE March 10,2008 (SATISH KUMAR MITTAL) nk JUDGE "