The Commissioner Of Income Tax, Patiala v. M/S Mohan Bottling Co (P) Ltd, New Delhi

ITR No. 96 to 96A of 1996 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITR No. 96 to 96A of 1996 Date of decision: 29.04.2013 The Commissioner of Income Tax, Patiala ...Appellant versus M/s Mohan Bottling Co (P) Ltd, New Delhi ...Respondent CORAM:HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MS. JUSTICE RITU BAHRI Present:Ms. Savita Saxena, Advocatefor the appellant. Mr. Akshay Bhan, Advocate and Mr. Alok Mittal, Advocate, for the respondent. HEMANT GUPTA, J. (Oral) The present reference under Section 256(1) of the Income TaxAct, 1961 arises out of an order passed by the Income Tax AppellateTribunal (for short 'the Tribunal') on 24.04.1995 referring followingsubstantial questions of law for the opinion of this Court in relation toAssessment years 1986-87 and 1987-88: “1.Whether on the facts and in the circumstances of the case, theITAT was right in law in confirming the order of the first appellateauthority that for the purpose of disallowance u/s 40(c) the value ofperquisite arising to the Director on account of Interest attributable tointerest free amount advanced to him should be determined byallocating the said interest in the proportion as the borrowed funds ofthe assessee company bear to the total funds?” 2. Where, on the facts and in the circumstances of the case, the ITATwas right in law in upholding the order of the first appellate authorityregarding disallowance made u/s43B pertaining to sales-tax liability? ITR No. 96 to 96A of 1996 Qeustion No.1 stands answered in favour of the assessee andagainst the Revenue in ITR Nos.581 & 582 of 1995 titled 'The Commissionerof Income Tax Vs. M/s Mohan Bottling Co. Pvt. Ltd.' decided on 01.10.2010,when the Court said to the following effect: “Learned counsel for the revenue fairly states that the matteris covered against the revenue by judgment of this Court dated16.09.2008 in Porritts & Spencer (Asia) Ltd. Vs. CIT (2008) 175TAXMAN 533 (paras 51-52), wherein following the judgment of theHon'ble Supreme Court in V.M.Salgaocar & Bros. (P) Ltd. etc. Vs. CIT(2000) 243 ITR 383, it was held that giving of interest free loan toany employee was not covered by the provision of disallowanceunder Section 40A(5) or Section 40(c) of the Income Tax Act, 1961.” Question No.2 is identical to the question of law decided in ITRNo.92 of 1996 titled 'The Commissioner of Income Tax, Patiala vs. M/sPunjab Beverages Pvt. Ltd., New Delhi'on 22.11.2006 in favour of theassessee relying upon the judgment of the Supreme Court in Allied Motors(P) Limited vs. Commissioner of Income Tax (1997) 224 ITR 677. The Courtheld to the following effect: “We find that the issue is covered against the revenue and infavour of the assessee by the judgment of Hon'ble Supreme Court inAllied Motors (P) Limited Vs. Commissioner of Income Tax (1997)224 ITR 677. Following the above judgment of the Hon'ble Supreme Court,we have decided the issue against the revenue and in favour of theassessee vide our order dated 05.09.2006 in ITR No.94 of 1996, theCommissioner of Income Tax (C), Ludhiana Vs. M/s Avery Cycle Inds.Pvt. Limited, Ludhiana. Accordingly, the question is answered against the revenue andin favour of the assessee.” In view of the above, both the questions of law, referred to bythe Tribunal for the opinion of this Court, are answered against the Revenue ITR No. 96 to 96A of 1996-3-and in favour of the assessee. Disposed of accordingly. (HEMANT GUPTA) JUDGE April 29, 2013 G.Arora/Vimal (RITU BAHRI) JUDGE