The Nakodar Cooperative Sugarmills, Ltd., Nakodar v. Commissioner Of Income Tax-Ii,Jalandhar And Another

-Incometax Appeal No. 2 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 2 of 2006Date of decision: 21.2.2011 The Nakodar Cooperative SugarMills, Ltd., Nakodar --- Appellant Versus Commissioner of Income Tax-II,Jalandhar and another --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. M.R. Sharma, Advocatefor the appellant-assessee. --- AJAY KUMAR MITTAL, J. The paper-book of this case has not been received from theconcerned Branch as the same is said to have burnt in the fire incidentthat took place in the premises of this Court on the night of 30th January,2011. Learned counsel for the appellant has made available two copiesof paper-book to the Court for reconstruction of the file. The said copiesare taken on record and the paper-book of the appeal is treated ashaving been re-constructed. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the assessee against theorder dated 27.10.2005, passed by the Income Tax Appellate Tribunal Amritsar Bench, Amritsar (in short “the Tribunal”) in ITA No. 61(ASR)/2004, relating to the assessment year 1994-95. The following substantial questions of law have been claimed for determination by this Court: (i)Whether in the facts and circumstances of the case, theorders, Annexure P-1, P-2 and P-3 are legally sustainable?orders, Annexure P-1, P-2 and P-3 are legally sustainable? (ii)Whether the Tribunal is correct in law in holding that whilecomputing the profits and gains derived from an industrialundertaking for the purposes of computing deduction u/s80-I, the losses brought forward from the previousassessment years 1992-93 and 1993-94 are to be set offfrom the total income?computing the profits and gains derived from an industrialundertaking for the purposes of computing deduction u/s80-I, the losses brought forward from the previousassessment years 1992-93 and 1993-94 are to be set offfrom the total income? (iii)Whether in the facts and circumstances of the case theorder disallowing the deduction under Section 80-I is legallysustainable, the same being based on mere presumptionsand surmises and mere difference of opinion which cannotform the basis of adjudication?order disallowing the deduction under Section 80-I is legallysustainable, the same being based on mere presumptionsand surmises and mere difference of opinion which cannotform the basis of adjudication? The facts, in brief, necessary for adjudication as narrated in the appeal, are that the appellant-assessee is engaged inmanufacturing of sugar etc for which the sugarcane is the main rawmaterial. The sale of sugar is controlled by the Government and therate of sugarcane is also fixed by the Government of India. Theappellant-society runs a Sugar Mill at Nakodar in the State of Punjaband the sugarcane growers are the members of the said Society. The appellant filed its return for the assessment year 1994-95 on 31.10.1994 declaring nil taxable income. The assessing officercompleted assessment under Section 143(1A) vide order dated 30.12.1994 and subject to certain adjustments, assessed the netincome at 3,85,39,654/-. The assessee sought refund after claimingdeduction under Section 80-P(2) (a)(iii) of the Act. The assessingofficer, however, refused to refund as claimed by the assessee but onlyallowed deduction of Rs. 90,87,694/-, under Section 80-I of the Act. Theassessee claims that the Revenue does not dispute the admissibility ofthe assessee with regard to deduction under Section 80-I of the Act andthe sole dispute is about the quantum of such deduction only. The appellant filed its return for the assessment year 1994-95 on 31.10.1994 declaring nil taxable income. The assessing officercompleted assessment under Section 143(1A) vide order dated 30.12.1994 and subject to certain adjustments, assessed the netincome at 3,85,39,654/-. The assessee sought refund after claimingdeduction under Section 80-P(2) (a)(iii) of the Act. The assessingofficer, however, refused to refund as claimed by the assessee but onlyallowed deduction of Rs. 90,87,694/-, under Section 80-I of the Act. Theassessee claims that the Revenue does not dispute the admissibility ofthe assessee with regard to deduction under Section 80-I of the Act andthe sole dispute is about the quantum of such deduction only. Elaborating the controversy, it is further stated in the appealthat the perusal of assessment order dated 27.3.1996 would reveal thatwhile completing assessment under Section 143(3) the assessingofficer worked out the income at Rs.6,81,22,461/- and reduced thebrought-forward losses of Rs. 2,21,76,475/- and Rs. 5,58,327/- for theassessment years 1992-93 and 1993-94 respectively and therebyworked out the taxable income at Rs. 4,54,38,472/- and then alloweddeduction at the rate of 20% thereon, under Section 80-I atRs.90,87,694/-. According to the assessee, the assessing officer oughtto have allowed the deduction on income of Rs. 6,81,22,461/- whichworked out to Rs.1,36,24,492/- as against the amount ofRs.90,87,694/-.The application of the assessee moved underSection 154 of the Act on 18.6.2001 for rectification of the order dated27.3.1996 of the assessing officer was rejected vide order dated25.10.2001. Appeal of the assessee was allowed by the Commissionerof Income Tax (Appeals), [hereinafter referred to as “CIT(A)”] vide orderdated 5.11.2003. The Revenue carried appeal against the order of theCIT(A) before the Tribunal. The Tribunal, vide order under appeal,allowed the appeal of the Revenue holding that the CIT(A) was not justified in allowing deduction under Section 80-I of the Act withoutsetting off the brought-forward business losses of the assessment years1992-93 and 1993-94. This is how the assessee is in appeal before us. The point in issue is, whether for determination of profits forthe purposes of deduction under Section 80-I of the Act, the unabsorbedbusiness losses of earlier years under Section 72 of the Act should beset off. Learned counsel for the appellant-assessee very fairlyconceded that the issue raised in this appeal is covered by the judgmentof the apex Court in Commissioner of Income-Tax v. ShirkeConstruction Equipment Ltd. (2007) 291 ITR 380 (SC) and standsconcluded against the assessee. In view of the above, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE February 21, 2011*rkmalik* (ADARSH KUMAR GOEL) JUDGE