Commissioner Of Income Tax-I,Chandigarh v. M/S. Punjab State Industrial Developmentcorporation Ltd., Chandigarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 597 of 2010Date of decision: 18.7.2011 Commissioner of Income Tax-I,Chandigarh --- Appellant Versus M/s. Punjab State Industrial DevelopmentCorporation Ltd., Chandigarh --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELACTING CHIEF JUSTICE HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Ms. Urvashi Dhugga, Senior Standing Counselfor the appellant-Revenue. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the revenue against theorder dated 30.11.2009 passed by the Income Tax Appellate TribunalChandigarh, Bench ‘B, Chandigarh (in short “the Tribunal”) in ITA No.732/CHANDI/2009, relating to the assessment year 2005-06. 2.The following substantial questions of law have been claimed for determination of this Court: “ (i)Whether on the facts and circumstances of the case theITAT was justified in holding that sale of shares by theassessee resulted in capital gains and not Profit & Lossfrom business when the main business of the asssesseeis to provide financial support to variousindustries/business concerns through investments inequity to earn profit from the same?ITAT was justified in holding that sale of shares by theassessee resulted in capital gains and not Profit & Lossfrom business when the main business of the asssesseeis to provide financial support to variousindustries/business concerns through investments inequity to earn profit from the same? (ii)Whether on the facts and circumstances of the case theITAT was justified in holding that project survey expensesshould be treated as revenue expenditure where theproject survey expenses are in the nature of capitalexpenditure?ITAT was justified in holding that project survey expensesshould be treated as revenue expenditure where theproject survey expenses are in the nature of capitalexpenditure? (iii)Whether on the facts and circumstances of the case theITAT was justified in holding that the Udyog Sahayakexpenses should be treated as revenue expenditurewhereas the Udyog Sahayak expenses are in the natureof capital expenditure?ITAT was justified in holding that the Udyog Sahayakexpenses should be treated as revenue expenditurewhereas the Udyog Sahayak expenses are in the natureof capital expenditure? 3.Learned counsel for the revenue fairly conceded that thefirst two questions i.e.(i) and (ii) referred to above are covered by thedecision in Income Tax Reference No.20 of 2000 (The Punjab StateIndustrial Development Corporation Ltd., Chandigarh vs. TheCommissioner of Income Tax) decided on 30.9.2010, whereby thesame have been answered by this Court against the Revenue. We,therefore, following the decision aforesaid answer question Nos. (i)and (ii) against the Revenue and in favour of the assessee. 4.The facts, in brief, necessary for adjudication of questionNo.(iii) as narrated in the appeal briefly may be noticed. Theassessing officer made additions on various counts, amounting toRs. 5,89,70,790/-. The assessee had also debited an amount of Rs.4,66,909/- under the head Udyog Sahayak expenses and theassessing officer disallowed 50% of the said amount, i.e. Rs.2,33,455/- and added to the taxable income of the assessee, videorder dated 28.12.2007. 5.The Commissioner of Income-tax (Appeals) {in short “theCIT(A)”}, on appeal carried by the assessee deleted the addition onaccount of disallowance of Udyog Sahayak expenses, on the basis ofearlier order of the Tribunal in the case of the assessee and decidedthe appeal accordingly, vide order dated 27.4.2009. 6.appeal was dismissed vide the order under appeal. The revenue preferred appeal before the Tribunal. The 7.We have heard learned counsel for the revenue and haveperused the record. 5.The Commissioner of Income-tax (Appeals) {in short “theCIT(A)”}, on appeal carried by the assessee deleted the addition onaccount of disallowance of Udyog Sahayak expenses, on the basis ofearlier order of the Tribunal in the case of the assessee and decidedthe appeal accordingly, vide order dated 27.4.2009. 6.appeal was dismissed vide the order under appeal. The revenue preferred appeal before the Tribunal. The 7.We have heard learned counsel for the revenue and haveperused the record. 8.It may be noticed that the issue under question No.(iii)relates to whether the amount incurred on account of UdyogSahayak expenses was to be treated as revenue expenses or thesame were in the nature of capital expenditure. The said expenseshad been allowed by observing that expenditure was incurred forproviding assistance/ guidance for setting up the industries whichwas for furtherance of its objectives. The said expense was held tobe revenue in nature. The finding recorded by the Tribunal in thisbehalf has not been shown to be perverse or illegal in any manner.Accordingly, the question under consideration is also answeredagainst the revenue and resultantly, the appeal is dismissed. July 18, 2011*rkmalik* (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) ACTING CHIEF JUSTICE