The Commissioner Of Income-Tax, Ludhiana v. M/S Shiply Hosiery & Textiles

ITR No. 152 of 1999 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 152 of 1999 Date of Decision: 14.9.2010 The Commissioner of Income-tax, Ludhiana Versus M/s Shiply Hosiery & Textiles ....Petitioner. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the revenue. None for the assessee. AJAY KUMAR MITTAL, J. 1.The Income Tax Appellate Tribunal, Chandigarh Bench(hereinafter referred to as “the Tribunal”) has referred the followingquestion of law arising out of its order dated 21.9.1998 passed in ITANo. 1829/1991, for opinion of this Court under Section 256 (1) of theIncome Tax Act, 1961 (for short “the Act”) for the assessment year1989-90:- “Whether on the facts and in the circumstances, theAppellate Tribunal was right in law in deleting theaddition of Rs.4,52,204/- made on account of receipt ofrefund of custom duty, on the ground that the right, titleand interest of the assessee on the disputed amountwas inchoate as the assessee did not have completedominion over the said amount and the provisions of section 41(1) could not be invoked?” 2.The facts as noticed in the statement of case are that theassessee filed its return on 31.8.1989 declaring an income ofRs.51,287/-. The Assessing Officer noted that an amount ofRs.4,52,204/- had been shown by the assessee under the head'suspense account' on liability side of the balance sheet. On enquiry,the assessee stated that the suspense account was on account ofrefund of custom duty granted by the Bombay High Court on thecondition that the same was to be refunded to the Government within 60days from the order of the Hon'ble Supreme Court in case the appealfiled by the Department was decided against it. The Assessing Officerobserved that the assessee had already claimed the amount asexpense in the year when the custom duty was paid and, therefore, heldthat the said amount was chargeable to tax in the year in question.Feeling aggrieved, the assessee filed an appeal before the CIT(A) whovide order dated 13.8.1991 deleted the said addition. On appeal by therevenue, the Tribunal while relying upon the order of the Tribunal in thecase of Shri Surinder Mohan Jalota, Trustee, M/s Jalota FamilyTrust v. ACIT, Ludhiana, ITA No. 1270 of 1990 for the assessmentyear 1987-88 and order dated 14.7.1998 passed in ITA No. 374/91(ITO v. Vijay Enterprises), for the assessment year 1987-88 hasadjudicated the issue in favour of the assessee by upholding the orderof the CIT (A). The Tribunal further held that the provisions of Section41(1) of the Act cannot be invoked because right, title and interest onthe disputed amount was inchoate and the assessee did not havecomplete dominion over the said amount. ITR No. 152 of 1999 3.We have heard the learned counsel for the revenue. 4.Learned counsel for the revenue submitted that theTribunal had decided the appeal by relying upon its earlier decision inSurinder Mohan Jalota's case against which reference had been made to this Court, i.e. ITR No. 106 of 1996 (The Commissioner ofIncome-tax, Patiala v. Surinder Mohan Jalota) which stands decidedon 5.7.2010 in favour of the revenue. He claims that following theaforesaid judgment, the reference deserves to be answered in favour ofthe revenue. 5.The matter in Surinder Mohan Jalota's case on the basis ofwhich the issue had been decided in favour of the assessee by theTribunal has since been reversed by this Court in ITR No. 106 of 1996decided on 5.7.2010 and the question of law has been answered infavour of the revenue. 6.Accordingly, the question referred is answered in favour ofthe revenue and against the assessee. (AJAY KUMAR MITTAL) JUDGE September 14, 2010gbs (ADARSH KUMAR GOEL)JUDGE