The Commissioner Of Income Tax v. M/S Porrits & Spencer (A) Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.44 of 2009 (O&M)Date of decision: 15.9.2009 The Commissioner of Income Tax. -----Appellant Vs. M/s Porrits & Spencer (A) Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:-None for the revenue. ORDER: Mr. Santosh Aggarwal, Advocatefor the assessee. ----- 1. The revenue has preferred this appeal under Section260-A of the Income Tax Act, 1961 (for short, “the Act”) againstorder dated 6.7.2007 passed by the Income Tax AppellateTribunal, Delhi Bench ‘B’, New Delhi in I.T.A. No.5365(DEL)/2004for the assessment year 2001-02, proposing to raise followingsubstantial questions of law:- “i)Whether the Hon’ble ITAT has erred in law inconfirming the order of the CIT(A) vide which thedisallowance of Rs.2,91,774/- made by the AssessingOfficer on account of personal use ofCars/Telephones was deleted, though the Hon’bleMadras High Court has already confirmed suchdisallowance of expenses in the case of M/s Chitram& Co. (P) Ltd. Vs. CIT, (191-ITR-96)?confirming the order of the CIT(A) vide which thedisallowance of Rs.2,91,774/- made by the AssessingOfficer on account of personal use ofCars/Telephones was deleted, though the Hon’bleMadras High Court has already confirmed suchdisallowance of expenses in the case of M/s Chitram& Co. (P) Ltd. Vs. CIT, (191-ITR-96)? ii)Whether the Hon’ble ITAT has erred in law inconfirming the order of the CIT(A) in which theconfirming the order of the CIT(A) in which the disallowance of Rs.77,552/- made by the AssessingOfficer on account of Foreign Tour expenses incurredon purchase of gifts was deleted? iii)Whether on the facts and circumstances of the case,the Hon’ble ITAT is right in holding the amount ofRs.15,22,822/- as revenue expenditure, whereasthese expenses were held by the Assessing Officer ascapital, the benefit of which was of enduring nature?”iv)Whether on the facts and circumstances of the case,the Hon’ble ITAT is erred in deleting the disallowancemade u/s 80HHC by reducing the business profits by90% of duty draw back, interest income, misc. incomeand provisions made in earlier years written back?” 2. In the course of assessment for the assessment yearin question, the Assessing Officer disallowed claim on account ofuse of cars/telephones and foreign tour expenses. TheAssessing Officer also held that expenditure claimed by theassessee towards repairs should be treated as capitalexpenditure. The Assessing Officer also applied Explanation(baa) to Section 80 HHC of the Act to the income of theassessee, claimed by the assessee to be miscellaneous income,such as from sale of scrap and some refunds and also writingback of provisions in earlier years, which according to theassessee did not fall in the said clause. 3. The CIT(A) partly allowed the appeal of the assessee.The Tribunal upheld the claim of the assessee. 4. As regards question No.(i), it was held that theexpenses claimed were not for personal use but were for officialuse. View of the Tribunal for the earlier assessment year in thecase of the assessee was followed. The finding of the Tribunalfor the earlier assessment year was upheld by this Court videorder dated 5.3.2009 in I.T.A. No.38 of 2008C.I.T.v. M/s Porrits & Spencer (Asia) Ltd. 5.As regards to question No.(ii), the Tribunal held thatthe claim for expenses on foreign tours was admissible on theprinciple of business expediency. Learned counsel for theassessee submits that the Tribunal followed its order for theearlier assessment year in the case of the assessee againstwhich I.T.A. No.539 of 2006 was filed by the revenue, but the saidfinding was not challenged. The finding of the Tribunal isconsistent with the view taken by this Court in CIT v. AveryCycle Industries Ltd.296 ITR 393 (P&H). & Spencer (Asia) Ltd. 5.As regards to question No.(ii), the Tribunal held thatthe claim for expenses on foreign tours was admissible on theprinciple of business expediency. Learned counsel for theassessee submits that the Tribunal followed its order for theearlier assessment year in the case of the assessee againstwhich I.T.A. No.539 of 2006 was filed by the revenue, but the saidfinding was not challenged. The finding of the Tribunal isconsistent with the view taken by this Court in CIT v. AveryCycle Industries Ltd.296 ITR 393 (P&H). 6. As regards question No.(iii), following its judgment forthe earlier assessment year in the case of the assess, which wasaffirmed by this Court inCITv. Porritts & Spencer (A) Ltd. 257ITR 49 (P&H), the Tribunal held that the expenditure was onrepairs and was, thus, revenue expenditure. 7. As regards to question No. (iv), the Tribunal, followingits order in the case of the assessee for the earlier assessmentyear, held that the expenses were not covered by Explanation(baa). Learned counsel for the assessee points out that the revenue preferred I.T.A. No.539 of 2006 but the said finding wasnot questioned. The tax effect involved on this ground isRs.16,628/- only. 8. We have heard learned counsel for the assessee andperused the record. 9. Since questions (i) and (iii) are covered by the earlierorder of this Court mentioned above, question (ii) is covered byjudgment of this Court inAvery Cycle (supra) and with respect toquestion (iv), the Tribunal has followed its decision in the case ofthe assessee for the earlier assessment year, which has attainedfinality, we are unable to hold that any substantial question of lawarises. 10. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE September 15, 2009ashwani ( DAYA CHAUDHARY ) JUDGE