HARYANA STATE SMALL INDUTRIES & EXPORT CORPORATION LTD. V. CIT, PANCHKULA

ITA/139/2014

AI Insights

The case involves M/s Haryana State Small Industries & Export Corporation Ltd., the appellant, contesting the disallowance of business expenses for the assessment year 2009-10. The appellant had claimed expenses related to employees' remuneration, interest on bank loans, and other administrative costs, despite having closed its business in 2002 and being under liquidation. The Assessing Officer disallowed these expenses, a decision upheld by the CIT(A) and later by the Tribunal, which also remanded the issue of income from other sources back to the Assessing Officer for verification of the expenditures incurred to earn such income. The High Court dismissed the appeal, referencing a prior judgment that had concluded similarly against the assessee.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 763406 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 10-07-2014
• Assessment Year: misc
• Other Referred Cases: M/s Haryana State Small Industries & Export Corporation Ltd. v. The CIT, Panchkula
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: RADHIKA SURI; RINKU DAHIYA
• Keywords: Assessment Year 2009-10; Business expenditure; Disallowance of Expenses; Income from other sources; Liquidation Expenses
• Section: 32; 37; 260A; 34; 30; 36; 31; 35; 33

Judgement Text

"ITA No. 139 of 2014 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 139 of 2014 (O&M) Date of Decision: 10.7.2014 M/s Haryana State Small Industries & Export Corporation Ltd. ....Appellant Versus The CIT, Panchkula ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE JASPAL SINGH. PRESENT: Ms. Radhika Suri, Senior Advocate with Ms. Rinku Dahiya, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. Delay of 73 days in refiling the appeal is condoned. 2. This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 20.8.2013 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”) for the assessment year 2009-10, claiming the following substantial question of law:- “Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal has fallen in error in disallowing the business expenditure incurred by the assessee which is allowable under Sections 30 to 37 of the Income Tax Act?” Singh Gurbachan 2014.08.04 15:43 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 139 of 2014 -2- 3. The facts, in brief, necessary for adjudication of the present appeal as narrated therein may be noticed. The assessee filed its return for the assessment year 2009-10 on 30.9.2009 declaring nil income. It closed its business w.e.f. 30.6.2002, however, the business was under liquidation and for the said purpose, expenses on employees remuneration, interest paid on the bank loans and selling, administration and distribution expenses were being incurred. The assessee claimed an amount of ` 1,32,35,943/- on account of such expenses incurred inclusive of depreciation of ` 174/-. The Assessing Officer vide order dated 28.11.2011 (Annexure A-1) disallowed the above said business expenses as no business was undertaken in the current year. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. The CIT(A) vide order dated 18.10.2012 (Annexure A-2) upheld the order of the Assessing Officer and treated the income of the assessee as income from other sources and disallowed business expenses. Still not satisfied, the assessee filed an appeal before the Tribunal who vide order dated 20.8.2013 (Annexure A-3) following its order for the preceding years held that the income earned by assessee could not be treated as business income and with regard to the issue of income from other sources, remanded the matter back to the Assessing Officer for verifying expenditure incurred to earn such income. Hence, the present appeal. 4. Learned counsel for the appellant very fairly accepted that the issue herein stands concluded against the assessee in the judgment dated 1.8.2012 passed in ITA No. 79 of 2012 (M/s Haryana State Small Industries & Export Corporation Ltd. v. The CIT, Panchkula). 5. In view of the above, no substantial question of law arises in Singh Gurbachan 2014.08.04 15:43 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 139 of 2014 -3- this appeal. Finding no merit in the instant appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE July 10, 2014 (JASPAL SINGH) gbs JUDGE Singh Gurbachan 2014.08.04 15:43 I attest to the accuracy and integrity of this document High Court Chandigarh "