Commissioner Of Income Tax (Central), Gurgaon v. Vee Gee Industrial Enterprises

In the High Court of Punjab and Haryana, at Chandigarh Income Tax Appeal No. 187 of 2014 Date of Decision: 28.7.2015 Commissioner of Income Tax (Central), Gurgaon ... Appellant(s) Versus Vee Gee Industrial Enterprises ... Respondent(s) CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE. HON’BLE MR. JUSTICE G.S. SANDHAWALIA. Present: Mr. Rajesh Sethi, Advocatefor the appellant(s). Dr. Rakesh Gupta, Mr. Kanisth Ganeriwalaand Ms. Kanika Ganeriwala, Advocates for the respondent(s). S.J. VAZIFDAR, A.C.J.(Oral) 1.This is an appeal against the order of the Income TaxAppellate Tribunal partly allowing the appeal filed by therespondent/assessee in respect of the assessment year 2005-06. TheTribunal deleted the addition of ` 31,10,000/- made by the AssessingOfficer in the assessment year 2005-06. 2.The revenue contends that the following substantial questionsof law arise for consideration:- “i)Whether the findings have been recorded by ITATon misreading and misinterpretation of facts andevidence emanating on record? ii) Whether the ITAT did not commit grave error inarriving at such conclusions after adopting erroneous criteria and by importing such facts andcircumstances which are contrary to record? iii) Whether, on the facts and in the circumstances ofthe case, the Ld. ITAT has erred in law in deletingthe addition of ` 31.10 lacs on account of sale ofscrap in A.Y. 2005-06 by holding it to be pertainingto assessment year 2007-08, when on the basis ofseized documents exact year of taxation isidentifiable?” 3.For the purpose of this appeal, we will assume as correct thethe finding of fact by the Assessing Officer and the Commissioner ofIncome Tax that the amount of ` 31,10,000/- pertained to theassessment year 2005-06 and not the assessment year 2007-08. On16.1.2007, the search was conducted under Section 132 of the IncomeTax Act, 1961 (hereinafter referred to as “the Act”). It is undisputed thatthe respondent/assessee surrendered the tax amounting to `84.20 lacs.It is also admitted that the amount was brought to tax by the departmentfor the assessment year 2007-08. The only contention raised by thedepartment is that the amount ought to be brought to tax for theassessment year 2005-06. 4.Even assuming that the department's contention is correct, itwould make no difference in view of the judgments of the Hon'bleSupreme Court, the Bombay High Court and the Delhi High Court. 5.In Commissioner of Income-Tax, Delhi, Ajmer, Rajasthan and Madhya Bharat v. Nagri Mills Co. Ltd. (1958) ITR 681, the Bombay High Court held:- “We have often wondered why the Income-taxauthorities, in a matter such as this where the deduction isobviously a permissible deduction under the Income-Tax Act,raise disputes as to the year in which the deduction should beallowed. The question as to the year in which a deduction isallowable may be material when the rate of tax chargeable onthe assessee in two different years is different; but in the caseof income of a company, tax is attracted at a uniform rate, andwhether the deduction in respect of bonus was granted in theassessment year 1952-53 or in the assessment yearcorresponding to the accounting year 1952, that is in theassessment year 1953-54, should be a matter of noconsequence to the Department; and one should have thoughtthat the Department would not fritter away its energies infighting matters of this kind. But, obviously, judging from thereferences that come up to us every now and then, theDepartment appears to delight in raising points of thischaracter which do not affect the taxability of the assessee orthe tax that the Department is likely to collect from himwhether in one year or the other.” 6.This judgment was followed by the Delhi High Court inCommissioner of income-Tax and Another v. Dinesh Kumar Goel 6.This judgment was followed by the Delhi High Court inCommissioner of income-Tax and Another v. Dinesh Kumar Goel (2011) 333 ITR 10 (Delhi). The Delhi High Court, after quoting theabove observations, observed as under:- “26.Though our discussion on the issue is complete theparting comments need to be made. The receipts relate to theunexecuted packages, which are not shown in the instant yearwould be shown in the succeeding year. Rate of tax in respectof companies remains the same in all these years. Therefore,the Revenue does not lose anything, as it would receive the tax on this income in the succeeding year. Still issues areraised and much outcry is made for nothing.”XXXXXXXXXXXXXXXXXXXX28.In this Court, in its decision dt. 6[th] May, 2008 i ITRef. No. 229 of 1988 entitled CIT vs. Vishnu Industrial Gases(P) Ltd. had quoted the aforesaid passage and thereafterremarked that the situation does not seem to have changedover the last fifty years and the Revenue continues to agitatethe question whether tax is leviable in a particular year or insome other year. Alas! The aforesaid words of wisdom ofBombay High Court reminded to the Revenue authorities morethan two years ago again have not made any dent on thepsyche of the Revenue.” 7.The matter, in any event, stands concluded by the judgment of the Hon'ble Supreme Court in Commissioner of Income Tax v. ExcelIndustries Limited (2013) 358 ITR 295 (SC). The Hon'ble SupremeCourt held:- “32. Thirdly, the real question concerning us is the yearin which the assessee is required to pay tax. There is nodispute that in the subsequent accounting year, the assesseedid make imports and did derive benefits under the advancelicence and the duty entitlement pass book and paid taxthereon. Therefore, it is not as if the Revenue has beendeprived of any tax. We are told that the rate of tax remainedthe same in the present assessment year as well as in thesubsequent assessment year. Therefore, the dispute raised bythe Revenue is entirely academic or at best may have a minortax effect. There was, therefore, no need for the Revenue tocontinue with this litigation when it was quite clear that notonly was it fruitless (on merits) but also that it may not haveadded anything much to the public coffers.” 8.It was conceded that even in the present case, the rate of taxremained the same in both the assessment years i.e. 2005-06 and2007-08. Following the above judgment of the Hon'ble Supreme Court, itmust be held that the dispute raised by the revenue is essentiallyacademic. The issue may have some tax effect in that if the departmentis correct and the amount ought to have been brought to tax two yearsearlier, there would be loss of interest for two years on the amount of` 31,10,000/-. The department has not raised the claim in that regard.We do not wish to express any opinion as to the right of the departmentto claim interest. 9.In the circumstances, the questions of law, therefore, aredecided in favour of the assessee. The appeal, is, therefore, dismissed. (S.J.Vazifdar)Acting Chief Justice July 28, 2015“DK” (G.S.Sandhawalia)Judge