Commissioner Of Income Tax-Iii v. M/S Nahar Spinning Mills Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.470 of 2006 (O&M)Date of decision: 12.11.2009 Commissioner of Income Tax-III Vs. M/s Nahar Spinning Mills Ltd. -----Appellant -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE GURDEV SINGH Present:-Mr. Rajesh Sethi, Sr. Standing Counselfor the revenue.for the revenue. Mr. Sanjay Bansal, Sr. Advocate withMr. Prashant Bansal, Advocatefor the assessee. --- ORDER: 1. This appeal has been preferred by revenue underSection 260A of the Income Tax Act, 1961 (for short, “the Act”)against the order dated 31.5.2005 of the Income Tax AppellateTribunal, Chandigarh Bench ‘A’ in I.T.A. No.5/Chandi/1996 for theassessment year 1993-94, proposing to raise followingsubstantial questions of law:- 1. “Whether on the facts and circumstances of thecase, the Hon’ble ITAT was right in law inholding that Central Sales Tax and Sales Tax becase, the Hon’ble ITAT was right in law inholding that Central Sales Tax and Sales Tax be excluded from the total turnover of the assesseewhile computing deduction u/s 80 HHC?” 2. “Whether on the facts and in the circumstancesof the case, the ITAT was correct in law indirecting not to reduce 10% of the interestincome portfolio income, investment income,Misc. receipt and rental income from the profit ofbusiness for the purpose of computation ofdeduction under section 80 HHC of I.T. Act,1961?”of the case, the ITAT was correct in law indirecting not to reduce 10% of the interestincome portfolio income, investment income,Misc. receipt and rental income from the profit ofbusiness for the purpose of computation ofdeduction under section 80 HHC of I.T. Act,1961?” 3. “Whether on the facts and in the circumstancesof the case, the Hon’ble ITAT was justified inallowingpre-operativeexpensesofRs.6011,744/- by ignoring provisions of section35(D)(2)(d) of I.T. Act, 1961 which requires tobe treated as capital expenditure?”of the case, the Hon’ble ITAT was justified inallowingpre-operativeexpensesofRs.6011,744/- by ignoring provisions of section35(D)(2)(d) of I.T. Act, 1961 which requires tobe treated as capital expenditure?” 2. Learned counsel for the revenue fairly states thatquestion No.1 can no longer be pressed in view of judgment ofthe Hon’ble Supreme Court inCommissioner of Income Tax v.Lakshmi Machine(2007) 290 ITR 667 and judgment of thisCourt inCommissioner of Income Tax v. Vardhman PolytexLtd.(2008) 296 ITR 382. 3. With regard to question No.2, it is submitted that afterfiling of the appeal, identical question has been considered by theHon’ble Supreme Court inHero Exports v. Commisisoner ofIncome Tax(2007) 295 ITR 454 and in view of said judgment,the matter will require reconsideration by the Tribunal. 4. As regards question No.3, it is submitted that the saidquestion arose before the Tribunal but has not been adjudicatedupon. 5. Learned counsel for the assessee does not disputethe above position. 6. Accordingly, this appeal is allowed. The order of theTribunal is set aside and the matter is remanded to the Tribunalfor fresh decision in accordance with law. (ADARSH KUMAR GOEL) JUDGE November 12, 2009ashwani ( GURDEV SINGH ) JUDGE