Commissioner Of Income Tax-Iii vs M/S Nahar Spinning Mills Ltd on 12 November, 2009

     IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                              CHANDIGARH.


                                            I.T.A. No.470 of 2006 (O&M)
                                            Date of decision: 12.11.2009


Commissioner of Income Tax-III
                                                            -----Appellant
                                      Vs.
M/s Nahar Spinning Mills Ltd.
                                                         -----Respondent

CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
            HON'BLE MR. JUSTICE GURDEV SINGH

Present:-   Mr. Rajesh Sethi, Sr. Standing Counsel
            for the revenue.

            Mr. Sanjay Bansal, Sr. Advocate with
            Mr. Prashant Bansal, Advocate
            for the assessee.

                 ---

ORDER:

1. This appeal has been preferred by revenue under

Section 260A of the Income Tax Act, 1961 (for short, “the Act”)

against the order dated 31.5.2005 of the Income Tax Appellate

Tribunal, Chandigarh Bench ‘A’ in I.T.A. No.5/Chandi/1996 for the

assessment year 1993-94, proposing to raise following

substantial questions of law:-

1. “Whether on the facts and circumstances of the
case, the Hon’ble ITAT was right in law in
holding that Central Sales Tax and Sales Tax be
ITA No.470 of 2006 2

excluded from the total turnover of the assessee
while computing deduction u/s 80 HHC?”

2. “Whether on the facts and in the circumstances
of the case, the ITAT was correct in law in
directing not to reduce 10% of the interest
income portfolio income, investment income,
Misc. receipt and rental income from the profit of
business for the purpose of computation of
deduction under section 80 HHC of I.T. Act,
1961?”

3. “Whether on the facts and in the circumstances
of the case, the Hon’ble ITAT was justified in
allowing pre-operative expenses of
Rs.6011,744/- by ignoring provisions of section
35(D)(2)(d) of I.T. Act, 1961 which requires to
be treated as capital expenditure?”

2. Learned counsel for the revenue fairly states that

question No.1 can no longer be pressed in view of judgment of

the Hon’ble Supreme Court in Commissioner of Income Tax v.

Lakshmi Machine (2007) 290 ITR 667 and judgment of this

Court in Commissioner of Income Tax v. Vardhman Polytex

Ltd. (2008) 296 ITR 382.

3. With regard to question No.2, it is submitted that after

filing of the appeal, identical question has been considered by the

Hon’ble Supreme Court in Hero Exports v. Commisisoner of

Income Tax (2007) 295 ITR 454 and in view of said judgment,

the matter will require reconsideration by the Tribunal.
ITA No.470 of 2006 3

4. As regards question No.3, it is submitted that the said

question arose before the Tribunal but has not been adjudicated

upon.

5. Learned counsel for the assessee does not dispute

the above position.

6. Accordingly, this appeal is allowed. The order of the

Tribunal is set aside and the matter is remanded to the Tribunal

for fresh decision in accordance with law.

                                       (ADARSH KUMAR GOEL)
                                               JUDGE


November 12, 2009                            ( GURDEV SINGH )
ashwani                                           JUDGE