Ita/843/2010 Of Commissioner Of Income Tax-Ii, Ludhiana v. M/S Avon Cycles Ltd

ITA No. 843 of 2010 (O&M) IN THE HIGH COURT OR PUNJAB AND HARYANA|AT CHANDIGARH ITA No. 843 of 2010 (O&M) Date of Decision: 21.04.2016 The Commissioner of Income Tax-II, Ludhiana ....... Appellant *#+&,& M/s Avon Cycles Ltd. ...... Respondent CORAM: HON'BLE MR. JUSTICK RAJESH BINDAL,HON'BLE MR. JUSTICE HARINDER SINGH SIDHUHON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present:Mr. Zora Singh Klar, Advocatefor the appellant.for the appellant. Mr. Alok Mittal, Advocate|for the respondent. RAJESH BINDAL,J. This appeal has been filed under Section 260 A of theIncome Tax Act, 1961 (for short ‘the Act’), against the order dated29.1.2010 passed by the Income Tax Appellate Tribunal, ChandigarhBench (A), Chandigarh, in ITA No. 466/Chd/2007, for the assessmentyear 2002-03, raising the following substantial questions of law: (1)Whether on the facts and in the circumstances otthe case, the Tribunal was legally justified indeleting the addition of Rs. 20,797/- being theexpenditure incurred on foreign traveling of thedirector's wife for non-business purposes?the case, the Tribunal was legally justified indeleting the addition of Rs. 20,797/- being theexpenditure incurred on foreign traveling of thedirector's wife for non-business purposes? (41) Whether on the facts and in the circumstances otthe case, the Tribunal was legally justified indeleting the addition of Rs.1,00,106/- made bythe assessing officer on account of interest freeadvances to the parties though the company hasraised huge funds from financial institutions andpayinginterestOTthesame?the case, the Tribunal was legally justified indeleting the addition of Rs.1,00,106/- made bythe assessing officer on account of interest freeadvances to the parties though the company hasraised huge funds from financial institutions andpayinginterestOTthesame? ITA No. 843 of 2010 (O&M)-)| (411) Whether on the facts and in the circumstancesof the case, the Tribunal was legally justified indirecting the assessing officer to re-compute theprofits of business by including 10% of theinterest and dividend income as profits ofbusiness tor working out deduction under sectionSOHHC of the Act?of the case, the Tribunal was legally justified indirecting the assessing officer to re-compute theprofits of business by including 10% of theinterest and dividend income as profits ofbusiness tor working out deduction under sectionSOHHC of the Act? (iv) Whether on the facts and circumstances of thecase, the ITAT was right in law in not holdingthat the total sale consideration inclusive of facevalue of DEPB and premium amount receivedthereof represents profit chargeable under section28(ilid) and 28 (ilie) of the Income Tax Act,5635@case, the ITAT was right in law in not holdingthat the total sale consideration inclusive of facevalue of DEPB and premium amount receivedthereof represents profit chargeable under section28(ilid) and 28 (ilie) of the Income Tax Act,5635@ (v) Whether on the facts and circumstances of thecase, the ITAT was right in law in not holdingthat profit on transfer of DEPB entitlementrepresents the entire amount inclusive ofpremium of sale of such DEPB?case, the ITAT was right in law in not holdingthat profit on transfer of DEPB entitlementrepresents the entire amount inclusive ofpremium of sale of such DEPB? (vi) Whether on the facts and circumstances of thecase, the ITAT was right in law in holding thatthe word “profit” referred to in Section 28 (ilid)and 28(ilie) of Income Tax Act, 1961 means thedifference between the sale price of DEPB andthe fact value of DEPB ignoring the facts thatentire amount represent the profit in the hands ofassessee?case, the ITAT was right in law in holding thatthe word “profit” referred to in Section 28 (ilid)and 28(ilie) of Income Tax Act, 1961 means thedifference between the sale price of DEPB andthe fact value of DEPB ignoring the facts thatentire amount represent the profit in the hands ofassessee? (vi) Whether on the facts and circumstances of thecase, the ITAT was right in law in holding thatthe word “profit” referred to in Section 28 (ilid)and 28(ilie) of Income Tax Act, 1961 means thedifference between the sale price of DEPB andthe fact value of DEPB ignoring the facts thatentire amount represent the profit in the hands ofassessee?case, the ITAT was right in law in holding thatthe word “profit” referred to in Section 28 (ilid)and 28(ilie) of Income Tax Act, 1961 means thedifference between the sale price of DEPB andthe fact value of DEPB ignoring the facts thatentire amount represent the profit in the hands ofassessee? (vil) Whether on the facts and circumstances of thecase the ITAT was right in law in deducting theface value of DEPB from sale price of DEPB forcalculating profit under section 28(ilid) and 28(iiie) of Income Tax Act, 1961 as if the face valueis the cost incurred by the assessee to acquire the*&,%@case the ITAT was right in law in deducting theface value of DEPB from sale price of DEPB forcalculating profit under section 28(ilid) and 28(iiie) of Income Tax Act, 1961 as if the face valueis the cost incurred by the assessee to acquire the*&,%@ ITA No. 843 of 2010 (O&M) -3- (viii) Whether on the facts and circumstances of thecase the ITAT was right in law in holding thatthe word profit referred to in sections 28(ilid) and(iiie) of the Income Tax Act, 1961 requires anyartificial cost to be interpolated to the extent thatthe face value of DEPB/DERC should bededucted from the sale proceeds for the purposeof determination of deduction under sectionSQHHC of the Income Tax, 1961?case the ITAT was right in law in holding thatthe word profit referred to in sections 28(ilid) and(iiie) of the Income Tax Act, 1961 requires anyartificial cost to be interpolated to the extent thatthe face value of DEPB/DERC should bededucted from the sale proceeds for the purposeof determination of deduction under sectionSQHHC of the Income Tax, 1961? (ix) Whether on the facts and circumstances of thecase the ITAT has failed to appreciate thatdeduction u/s 80HHC of the Income Tax Act,1961 was rightly computed in accordance withamendment made by the Taxation Law(Amendment) Act, 2005 with retrospective effectfrom 1.4.1998>?case the ITAT has failed to appreciate thatdeduction u/s 80HHC of the Income Tax Act,1961 was rightly computed in accordance withamendment made by the Taxation Law(Amendment) Act, 2005 with retrospective effectfrom 1.4.1998>? Learned counsel for the appellant-revenue submitted thatin view of circular No21/2015 dated 10.12.2015 read with circularNo.279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by CentralBoard of Direct Taxes, he does not wish to press the present appeal, asthe tax effect involved is less thana20 lacs. However, he prays thatliberty be granted to the revenue to file an application for revival of theappeal in case something survives therein, Dismissed as not pressed with liberty as prayed for. It ishowever, clarified that withdrawal of the appeal by the revenue shallnot be taken as affirmation of order of the Tribunal on merits. Thelegal issue as claimed by the revenue is left open to be adjudicated inan appropriate case, (RAJESH BINDAL)JUDGE 21.04.2016TEe M (HARINDER SINGH SIDHU)JUDGE