THE COMMISIONER OF INCOME TAX.PTL V. M/S PB TRACTOR LTD

ITA/23/2002

AI Insights

The case involves the Commissioner of Income-tax, Patiala as the appellant and M/s Punjab Tractors Limited, Mohali as the respondent. The dispute centered on the allowance of rent for a guest house under Section 30 of the Income Tax Act, 1961, and the applicability of provisions under sections 37(1) and 37(4). The Income Tax Appellate Tribunal had previously ruled in favor of the respondent, which was upheld by the CIT (A). The revenue's appeal to the High Court challenged this decision, leading to the framing of a substantive question of law regarding the legal interpretation of the relevant sections of the Income Tax Act concerning the expenses claimed for the guest house.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 769046 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 26-04-2010
• Assessment Year: misc
• Other Referred Cases: Punjab Tractors Limited, Mohali v. Commissioner of Income Tax, Patiala
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: PANKAJ JAIN
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Assessment year 1988-89; Entertainment Expenses; Guest House Rent; Income Tax; Maintenance expenses; Expenditure Limit; Form and Report of Accountant
• Section: 80HHC; 37(1); 30; 37(2A); 40A(5); 37(3); 260-A; 37(4)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 23 of 2002 D.O.D.: 26.04.2010 The Commissioner of Income-tax, Patiala ..Appellant Versus M/s Punjab Tractors Limited, Mohali ...Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE JITENDRA CHAUHAN Present: Ms. Urvashi Dhugga, Advocate, for the appellant-revenue. Mr. Pankaj Jain, Advocate, for the respondent-assessee. 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. The revenue is in appeal under Section 260-A of the Income-tax Act, 1961 (for brevity, ‘the Act’), against the order dated 22.6.2001, passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, in I.T.A. No. 1179/Chandi/1994, in respect of Assessment Year 1988-89. When the appeal was admitted on 21.7.2003, the Division Bench has framed the following substantive question of law:- “Whether in the facts and circumstances of the case, the ITAT was right in law in allowing rent for Guest House u/s 30 of the I.T. Act, 1961 and provisions of section 37(1) and 37(4) were not attracted in this case?” I.T.A. No. 23 of 2002 2. Brief facts of the present case are that return of income in respect of the assessment year 1988-89, was filed on 27.12.1988 declaring total income at Rs. 47,59,540/-. The Assessing Officer after conducting assessment proceedings, vide order dated 5.2.1990, made additions of (i) Rs. 4,67,025/- under Section 37(2A) of the Act for non-production of evidence relating to entertainment expenses; (ii) Rs. 1,33,800/- under Section 37(3) of the Act on account of maintenance of Guest House; (iii) Rs. 65,939/- under Section 40A(5) of the Act for exceeding the limit of expenditure; and Rs. 21,62,939/- under Section 80HHC of the Act because the respondent-assessee failed to furnish the prescribed form and the report of the Accountant along with the return as required under sub-section (4) of Section 80HHC. Against the order passed by the Assessing Officer, the respondent-assessee filed an appeal under Section 250(6) of the Act before the CIT (A), Patiala. The CIT (A), vide order dated 22.8.1994, allowed relief of 50% on the first issue. On the second issue, it has been held that the rent paid for guest house is covered under Section 30 and the same can be allowed. Therefore, the addition of Rs. 1,33,800/- was deleted. Similarly, by following the order of the Tribunal relating to earlier years, the CIT (A) deleted the additions of Rs. 65,939/- as also addition of Rs. 21,62,792/- while relying upon its own order passed in respect of earlier year in the case of the respondent-assessee. The appellant-revenue then preferred an appeal before the Tribunal. The Tribunal has upheld the order passed by the CIT(A) and dismissed the revenue’s appeal vide impugned order dated 22.6.2001. 3. Feeling aggrieved the revenue has approached this Court and a substantive question of law noticed in para 1 of this order has been framed by the Division Bench on 21.7.2003. 4. Ms. Urvashi Dhugga, learned counsel for the revenue has pointed 2 I.T.A. No. 23 of 2002 out that the substantive question of law framed in the instant appeal stand already answered in the appeal of the assessee-respondent, namely, I.T.A. No. 60 of 2001, today itself and, therefore, no debate on the issue is necessary. 5. Mr. Pankaj Jain, learned counsel for the respondent-assessee at the outset has conceded that the substantive question of law raised in this appeal already stands answered against the assessee in ITA No. 60 of 2001 (Punjab Tractors Limited, Mohali v. Commissioner of Income Tax, Patiala), which has been decided by us vide a separate order of even date. Accordingly, the instant appeal is also allowed in terms of the order passed in ITA No. 60 of 2001. The question is decided in favour of the appellant-revenue and against the respondent-assessee. (M.M. KUMAR) JUDGE (JITENDRA CHAUHAN) April 26, 2010 JUDGE Pkapoor 3 "