Nuchem Limited V. Commissioner of Income Tax Haryana at Rohtak and others

CWP/2262/1994

AI Insights

The case involves Nuchem Limited, the petitioner, who sought to quash orders dated 25.9.1991 and 5.7.1993 that rejected their claim for a deduction under Section 80MM of the Income Tax Act, 1961, concerning income from royalty. Initially, the assessing authority denied the claim due to the absence of agreements approved by the Central Board of Direct Taxes (CBDT) during the assessment proceedings. The petitioner later produced these documents, which were approved by the CBDT but only after the assessment order was made. The High Court of Punjab and Haryana, upon reviewing the documents and the circumstances, decided to remand the case back to the revisional authority for a fresh decision, emphasizing that the documents were crucial and should have been considered.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 815889 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 25-05-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: URVASHI DHUGGA
• Assessee Lawyers: P C GOYAL
• Keywords: Assessment Order; Revision petition; Revisional Authority; Income from royalty; Deduction under Section 80MM
• Section: 143(3); 154; 264; 80MM

Judgement Text

"CWP No.2262 of 1994(O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CM No.2797 of 2011 and CWP No.2262 of 1994 (O&M) Date of Decision: 25.5.2011 Nuchem Limited ....Petitioner Versus Commissioner of Income Tax Haryana at Rohtak and others ….Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. P.C.Goyal, Advocate for the petitioner. Ms. Urvashi Dhugga, Sr.Standing Counsel for the revenue. Adarsh Kumar Goel, ACJ. 1. Heard. Order dated 14.1.2011 dismissing the writ petition for non-prosecution is recalled. 2. This petition seeks quashing of orders dated 25.9.1991 and 5.7.1993 under section 264 of the Income Tax Act, 1961 (‘the Act’) rejecting the claim of the petitioner for deduction under Section 80MM of the Act in respect of income from royalty. The petitioner put forward the said claim before the assessing authority which was not allowed against which revision petition was filed which has been dismissed with the following observations:- 1 CWP No.2262 of 1994(O&M) “The conditions for claiming deduction under section 80MM are that there should be agreement with the above companies duly approved by the Central Board of Direct Taxes. The Assessing Officer therefore, required the assessee to file copy of the agreements, duly approved by the CBDT, with these concerns in support of its claim of deduction under section 80MM of the Income Tax Act, 1961. The documents which were called by the Assessing Officer vide her letters dated 2.3.1990 and again on 13.3.1990 as such documents were not filed by the assessee during the course of assessment proceedings. The assessee did not comply with the requirement. The Assessing Officer then issued notice under section 154 on 26.4.1990 proposing to withdraw deduction wrongly allowed under section 80MM of the Income Tax Act, 1961 at the time of assessment under section 143(3) of the Act. The case was fixed for 30.4.1990 but none attended. However, on 16.8.1990 Shri V.Talwar C.A. attended on behalf of the assessee but no reply was filed. Therefore, the assessee was again asked to show cause as to why deduction under section 80MM be not withdrawn under section 154 being a mistake apparent from the records as neither copy of agreement is filed nor is there any evidence that the agreement is approved. The case was fixed for 17.8.90 when Shri Talwar C.A. attended but no evidence, as called for, had been furnished. In such circumstances, the AO held that the assessee has nothing to say in this regard. The mistake being apparent from records was accordingly rectified vide order under section 154 dated 6.9.1990 by withdrawing the deduction under section 80MM amounting to Rs.4,07,037/- which was wrongly allowed at the time of assessment.” 2 CWP No.2262 of 1994(O&M) 3. In the writ petition, it has been pointed out that though the agreement under which royalty was received had been duly approved by the CBDT and the benefit had been given in the earlier assessment order, the petitioner could not produce the said documents. Reference has been made to documents annexed as Annexure P.9 collectively in support of the case of the petitioner. 4. We find that documents which have been now filed do show that the agreements in questions were duly approved by the CBDT. It is also clear from the record that the petitioner had been earlier given benefit under Section 80MM of the Act. The petitioner has given a valid reason for the documents not being produced at the time of assessment as the approval of the CBDT was itself subsequent to assessment order though prior to the revisional order. 5. We are the view that the documents relied upon by the petitioner which are documents of the department itself need to be taken into account by the revisional authority. 6. Accordingly, we allow this petition, set aside the impugned orders and remand the matter to the revisional authority for a fresh decision `in accordance with law. The petitioner may appear before the revisional authority for further proceedings on 25.7.2011. (Adarsh Kumar Goel) Acting Chief Justice May 25, 2011 (Ajay Kumar Mittal) ‘gs’ Judge 3 CWP No.2262 of 1994(O&M) 4 "