THE COMMR.OF INCOME TAX-III LDH. V. M/S NAHAR SPINNING MILLS LTD.

ITA/426/2006

AI Insights

The case involves the Commissioner of Income Tax III, Ludhiana as the appellant and M/s Nahar Spinning Mills Limited as the respondent. The core issue was whether the service charges of dyeing and knitting amounting to \\u20b9 7,38,90,128/- should be excluded from the total turnover of the assessee while computing deduction under section 80HHC of the Income Tax Act, 1961. The Income Tax Appellate Tribunal had previously ruled in favor of the respondent, leading to the present appeals by the revenue. The High Court of Punjab and Haryana decided to dispose of the appeals by aligning with the decision made in a similar case (ITA No.98 of 2008), which also favored the respondent.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 702422 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 28-07-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax III, Ludhiana v M/s Nahar Spinning Mills Limited, Ludhiana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Assessee Lawyers: SANJAY BANSAL; RAJNI PAL
• Keywords: Deduction; Income Tax; Miscellaneous Application; Service charges; Total Turnover
• Section: 80HHC; 260A

Judgement Text

"ITA No.426 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.426 of 2006 Date of decision: 28.7.2014 Commissioner of Income Tax III, Ludhiana ……Appellant Vs. M/s Nahar Spinning Mills Limited, 373, IAA, Ludhiana …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE JASPAL SINGH Present: Mr. Sanjay Bansal, Sr. Advocate with Ms. Rajni Pal, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. Ajay Kumar Mittal,J. 1. This order shall dispose of ITA Nos.426 and 428 of 2006 as according to the learned counsel for the parties, the substantial question of law raised in both the appeals is identical. However, the facts are being extracted from ITA No.426 of 2006. 2. ITA No.426 of 2006 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 24.10.2005, Annexure 3 passed by Income Tax Appellate Tribunal, Chandigarh Bench, ‘A’(in short, “the Tribunal') in M.A.No.180/Chandi/2005 arising out of ITA No.1026/Chandi/1998 for the GURBAX SINGH 2014.08.06 13:31 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.426 of 2006 2 assessment year 1995-96 claiming following substantial question of law:- “Whether on the facts and the circumstances of the case, the Hon’ble ITAT was right in law in holding that service charges of dyeing and knitting amounting to ` 7,38,90,128/- be excluded from the total turnover of the assessee while computing deduction under section 80HHC? 3. A few facts relevant for the decision of the controversy involved as narrated in ITA No.426 of 2006 may be noticed. The respondent is a limited company. It filed its return of income for the assessment year 1995-96 showing income of ` 14,41,02,270/-. The assessee is a manufacturer and exporter of cotton yarn, woolen hosiery garments and also trades in cotton yarn. The assessment was framed by the Assistant Commissioner of Income Tax, Central Circle V, Ludhiana on 17.3.1998, Annexure 1 at income of ` 14,46,36,553/-. Deduction under section 80HHC of the Act was reduced as service charges to the tune of `7,38,90,128/- were included in the total turnover for the computation of deduction under Section 80HHC of the Act. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 24.8.1998, Annexure A.2, the CIT(A) dismissed the appeal. The assessee filed further appeal before the Tribunal. Vide order dated 29.4.2005, Annexure 4, the Tribunal partly allowed the appeal. Feeling aggrieved, the assessee filed miscellaneous application before the Tribunal. Vide order 24.10.2005, Annexure 3, the Tribunal modified the order dated 29.4.2005 holding that service charges amounting to ` 7,38,90,128/- be excluded from the total turnover for the purpose of computing deduction under Section 80HHC of the Act. Hence the instant appeals by the revenue. 4. Learned counsel for the parties are ad idem that the issue herein GURBAX SINGH 2014.08.06 13:31 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.426 of 2006 3 stands concluded by the decision of this Court dated 6.3.2014 in ITA No.98 of 2008 in the case of the assessee (Commissioner of Income Tax III, Ludhiana v M/s Nahar Spinning Mills Limited, Ludhiana). 5. In view of the above, the appeals are disposed of in the same terms as in ITA No.98 of 2008. (Ajay Kumar Mittal) Judge July 28, 2014 (Jaspal Singh) Judge ‘gs’ GURBAX SINGH 2014.08.06 13:31 I attest to the accuracy and integrity of this document High Court Chandigarh "