High Court of Delhi · Judgments and reasoned final orders
Commissioner of Income Tax v. M/s Escorts Ltd.
ITA 1427/2006 ·
Section 2(24)(iv) addition of Rs. 1,71,30,343 already taxed in AY 2006-07 cannot be re-litigated; deletions of business-expansion, interest-free loan, section 14A, and product-development disallowances upheld as pure findings of fact.
1. FACTS OF THE CASE
The Revenue filed ITA 1427/2006 under section 260A against the ITAT's order dated 09.12.2005 in ITA No. 566/Del/2003 for AY 1999-2000, proposing five questions of law: (i) deletion of Rs. 1,71,30,343 added under section 2(24)(iv); (ii) allowance of Rs. 10,37,275 incurred on expansion/diversification as revenue expenditure; (iii) deletion of notional interest disallowance on an interest-free loan of Rs. 4.56 crore advanced to subsidiary M/s Escotrac & Investment Ltd.; (iv) restriction of section 14A disallowance against Rs. 2,01,88,412 tax-free dividend/US-64 income; and (v) allowance of Rs. 41,48,896 incurred on development and upgradation of products as revenue expenditure.
2. DISCUSSION BY THE COURT
At the hearing after twenty years of pendency, counsel for the assessee pointed out that with respect to Question (i), the sum of Rs. 1,71,30,343 had already been subjected to tax by the Revenue in AY 2006-07 pursuant to the ITAT's observation in paragraph 9 of the impugned order, and the assessee had accepted that assessment and paid the tax. The Court held that the Revenue could not press Question (i) once the amount had already been taxed in AY 2006-07. As regards Questions (ii) to (v), the Division Bench held that each issue turned purely on concurrent appreciation of facts by the appellate authorities and gave rise to no substantial question of law.
3. JUDICIAL DECISION
Holding that Question (i) did not survive in view of the subsequent taxation of the same sum in AY 2006-07 and that Questions (ii) to (v) raised no substantial question of law under section 260A, the Delhi High Court dismissed the Revenue's appeal.
4. OUTCOME
In favour of the assessee (M/s Escorts Ltd.); Revenue appeal ITA 1427/2006 dismissed.
5. AKHB REVIEW POINT
AKHB analysis: Where an addition deleted by the ITAT in an earlier assessment year (here, Rs. 1.71 crore under section 2(24)(iv) in AY 1999-2000) is subsequently brought to tax in a later year (AY 2006-07) and accepted by the assessee, the Revenue is precluded from pursuing its appeal for the earlier year to tax the same amount twice.
Source and verification
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