COMMISSIONER OF INCOME TAX-II LUDHIANA V. M/S ANAND CONCAST LTD.

ITA/33/2011

AI Insights

The case revolves around the appeal by the Commissioner of Income Tax against M/s Anand Concast Ltd. concerning the interpretation and application of certain provisions of the Income Tax Act, 1961, specifically related to the profit from the sale of DEPB (Duty Entitlement Pass Book) and the applicability of interest under Section 234D. The Tribunal had previously decided on these issues, which the High Court reviewed. The main legal questions pertained to whether the total sale consideration, including the face value and premium of DEPB, should be considered as profit under the specified sections of the Act, and whether the provisions of Section 234D applied retrospectively to the assessment year 2001-02.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 681386 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 27-01-2011
• Assessment Year: misc
• Other Referred Cases: CIT v. M/s F.C. Sondhi & Company (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: DENESH GOYAL
• Keywords: Assessment Year; DEPB; Interest charging; Profit chargeable; Sale Consideration
• Section: 80HHC; 234D; 260-A; 28 (iiid); 28(iiie)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.33 of 2011 (O&M) Date of decision: 27.1.2011 The Commissioner of Income Tax. -----Appellant. Vs. M/s Anand Concast Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Denesh Goyal, Standing counsel for the Revenue. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 25.6.2010 in I.T.A. No.252/CHD/2010 proposing to raise following substantial questions of law:- “(i) Whether on the facts and circumstances of the case, the ITAT was right in law in not holding that total sale consideration inclusive of face value of DEPB and premium amount received thereof represents profit chargeable under sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961? (ii) Whether on the facts and circumstances of the case, the ITAT was right in law in not holding that profit on transfer of DEPB entitlement represents the entire amount inclusive of premium of sale of such DEPB? (iii) Whether on the facts and circumstances of the case, the ITAT was right in law in holding that the word “profit” referred to in Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 means the difference between the sale price of DEPB and the face value of DEPB ignoring the fact that I.T.A. No.33 of 2011 the entire amount represents the profit in the hands of assessee? (iv) Whether on the facts and circumstances of the case, the ITAT was right in law in deducting the face value of DEPB from sale price of DEPB for calculating profit under Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 as if the face value is the cost incurred by the assessee to acquire the DEPB? (v) Whether on the facts and circumstances of the case, the ITAT was right in law in holding that the word profit referred to in Sections 28(iiid) and 28(iiie) of the Income Tax Act, 1961 requires any artificial cost to be interpolated to the extent that the face value of DEPB/DFRC should be deducted from the sale proceed for the purpose of determination of deduction under Section 80HHC of the Income Tax Act, 1961? (vi) Whether on the facts and circumstances of the case, the ITAT has failed to appreciate that deduction u/s 80HHC of the Income Tax Act, 1961 was rightly computed in accordance with amendment made by the Taxation Laws (Amendment) Act, 2005 with retrospective effect from 01.04.1998?” (vii) Whether on the facts and circumstances of the case, the Hon’ble Income Tax Appellate Tribunal was legally justified in deleting the charging of interest under section 234D ignoring the fact that the order charging interest was made on05.12.2008 i.e. after 01.06.2003, the date of inception of provision of section 234D of the Income-tax Act, 1961? (viii) Whether on the facts and in law the Hon’ble ITAT was legally justified in deleting the charging of interest under section 234D ignoring the fact that the provisions of section 234D are applicable on action taken after 01.06.2003 irrespective of the Assessment Year involved?” 2. As far as questions (i) to (vi) are concerned, it is stated that the same are covered by earlier order of this Court dated 16.8.2010 in I.T.A. No.299 of 2010 CIT v. M/s F.C. Sondhi & Company (P) Ltd., whereby the matter was remanded to the Tribunal. Accordingly, subject to the right of the respondent to 2 I.T.A. No.33 of 2011 move the Court if aggrieved, we dispose of the said questions in same terms. 3. As regards questions (vii) and (viii) relating to chargibility of interest under Section 234D of the Act for the assessment year 2001-02, the said provision having been incorporated only w.e.f. 1.6.2003, the Tribunal was justified in holding that the same could not apply to the year in question. The view so taken is not shown in any manner to be erroneous. No interference is, thus, called for with the view taken by the Tribunal on this aspect. The said questions cannot, thus, be held to be substantial questions of law. The appeal is disposed of. (ADARSH KUMAR GOEL) JUDGE January 27, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3 "