The Commissioner Of Income Tax-2,Mumbai v. Raymond Ltd

srk IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.1276 OF 2009 The Commissioner of Income Tax-2,Mumbai ...Appellant Versus Raymond Ltd. ...Respondent Mr.Vimal Gupta for appellant. Mr.Percy J. Pardiwala, Senior Advocate with Mr.Mohan Salian, Ms.Vaijayanta Shete and Mr.Jainuddin Khan i/b. Gagrats for respondents. CORAM: DR.D.Y. CHANDRACHUD & M.S.SANKLECHA, JJ. March 20, 2012. P.C. 1.This appeal by the Revenue is against the order of the Income Tax Appellate Tribunal dated 22 March 2007; the Assessment Year to which appeal relates being AY 1991-92. The following substantial questions of law are raised (A)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the increase in disallowance under Rule 6D made by the A.O.; (B) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting disallowance of foreign expenses incurred on on relatives of the Directors; Whether on the facts and in the circumstances of the (C)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting disallowance of pre-operative expenses even though the said expenditure pertains to establishment of textile and files division is capital in nature; (D)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the addition made on account of valuation of inventory; (E)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in reversing the order of CIT(A) and allowing the set off of loss incurred on sale of the bonds/units; (F)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in reversing the order of CIT(A) by allowing deduction under Section 80M without adjusting the loss on sale of shares; itxa-1276-2009 (G)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the addition made by A.O. despite the method adopted by assessee diminishing the taxable profit for the relevant A.Y.; (H)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the addition in value made by A.O. in respect of the goods in process in textile division; (I)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the disallowance made under Rule 6B? 2.Counsel appearing on behalf of the Revenue and counsel appearing on behalf of the assessee state that Questions A and C are covered against the Revenue by the judgment rendered today in companion Income Tax Appeal No.189 of 2011 for AY 1990-91. In view of the statement, no substantial question of law would arise. 3.As regards Questions E and F, it has been stated that both the questions besides being covered against the Revenue by the judgment rendered today in the companion appeal, would stand governed by the decision of the Supreme Court in Commissioner of Income Tax Vs. Wallfort Share and Stock Brokers P. Ltd.[1] Hence no substantial 1. (2010) 326 ITR 1 (SC). question of law would arise as regards Questions E and F. 4.The appeal is admitted on Questions B,D, G and H and with the consent of the counsel, the appeal is taken up for hearing and final disposal. The appeal is admitted on Questions B,D, G and H and with the 5.As regards Question B, the Assessing Officer made a disallowance in the amount of Rs.1,11, 324/- as being expenditure not incurred for the purpose of business. This expenditure was incurred on the travel of the spouses of the Directors overseas to Kenya and London. Before the CIT(A) the assessee did not press this ground of appeal. Since the assessee had given up the ground of appeal before the CIT (A), the Tribunal was in error in allowing the expenditure and in deleting the disallowance. We accordingly answer question B in the negative for the aforesaid reasons. 4.The appeal is admitted on Questions B,D, G and H and with the consent of the counsel, the appeal is taken up for hearing and final disposal. The appeal is admitted on Questions B,D, G and H and with the 5.As regards Question B, the Assessing Officer made a disallowance in the amount of Rs.1,11, 324/- as being expenditure not incurred for the purpose of business. This expenditure was incurred on the travel of the spouses of the Directors overseas to Kenya and London. Before the CIT(A) the assessee did not press this ground of appeal. Since the assessee had given up the ground of appeal before the CIT (A), the Tribunal was in error in allowing the expenditure and in deleting the disallowance. We accordingly answer question B in the negative for the aforesaid reasons. 6.As regards Questions D, G and H, by the judgment delivered today in companion Income Tax Appeal No.189 of 2011, this Court has come to the conclusion that there was no independent application of mind by the Tribunal. The Court has accordingly restored the appeal before the Tribunal for a decision afresh for that reason. Both the counsel state that the aforesaid grounds would consequently stand covered by the decision rendered today in the companion appeal. Hence grounds D, G and H will stand governed by the directions issued in the companion appeal, by restoring the grounds to the file of the Tribunal for a fresh decision. All rights and contentions of the parties are kept open. 7.As regards Question I, the Tribunal has while adverting to the provisions of Rule 6B noted that the CIT(A) directed that the gifts which did not bear the name or logo of the company may be excluded from the disallowance. The view of the Tribunal is consistent with the judgment of the Division Bench of this Court in Commissioner of Income Tax Vs. Allana Sons Pvt.Ltd.[2] In that view of the matter, Question I will not give rise to any substantial question of law. The appeal shall stand accordingly disposed of. There shall be no order as to costs. (DR.D.Y. CHANDRACHUD,J.) (M.S.SANKLECHA, J.)