Income Tax Act – Section 260A – Appeal is filed by revenue on the ground whether Tribunal has misinterpreted and misconstrued the material on record and consequently the impugned order is perverse and deserve to be set aside – Assessing authority during assessment proceedings had made a disallowance of provisions for premium towards leave encashment – this addition was deleted by Tribunal – hence the aggrieved revenue is in appeal – HELD –the Revenue has failed to substantiate its contention regarding perversity of findings recorded by the CIT(A) and Tribunal. The substantial question of law is answered accordingly and the appeal is dismissed.

2021-VIL-25-HP-DT

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

INCOME TAX APPEAL No. 28 OF 2016

DATE: 18.12.2021

PR. COMMISSIONER OF INCOME TAX SHIMLA.

H.P. INDUSTRIAL DEVELOPMENT CORPORATION, NEW HIMRUS

ASSESSEE BY: SH. VINAY KUTHIALA, SR. ADVOCATE WITH MS. VANDANA KUTHIALA, ADVOCATE

REVENUE BY: SH.VISHAL MOHAN, ADVOCATE

BEFORE

HON’BLE MS. JUSTICE SABINA

HON’BLE MR. JUSTICE SATYEN VAIDYA

JUDGMENT

The instant appeal has been heard on following substantial question of law, as framed vide order dated 23.5.2017:-

“Whether the Ld. ITAT has misinterpreted and misconstrued the material on record and consequently the impugned order is perverse and deserve to be set aside.”

2. Respondent vide return of income dated 24.9.2009 for assessment year 2009-10 disclosed income of Rs.9,03,66,353/-. The return so filed by respondent was scrutinized and assessed under Section 143 (3) of the Income Tax Act (for short ‘Act’) by Assessing Authority vide order dated 9.11.2011 and following additions were made:-

“i) Disallowance of Provisions for Group gratuity at Rs. 46,77,792/-

ii) Disallowance of provisions for preimum towards leave encashment amounting to Rs. 21,29,850/-

iii) Addition on a/c of interest on FDRs under ASIDE scheme amounting to Rs. 60,29,838/-

iv) Short profit on sale of plots Rs. 6,41,11,013/-

v) Expenses of CPF trust Rs. 1,11,537/-”

Thus, the total income of respondent was assessed at Rs. 16,74,26,380/-.

3. Aggrieved against aforementioned additions, respondent filed an appeal before CIT (A). Vide order dated 24.9.2012, CIT (A) upheld additional assessment on all counts except the addition of Rs. 6,41,11,013/-, made on account of short profit of sale of plots.

4. The respondent as well as Revenue both assailed the order dated 24.9.2012, passed by CIT(A) before ITAT. Both the appeals were decided by the ITAT by a common order dated 10.7.2015. On the issue of addition of Rs. 6,41,11,013/-, the order of CIT(A) was upheld. However, the addition of Rs.21,29,850/- towards provisions and premium of leave encashment was deleted by ITAT. In the instant appeal, we are to adjudicate on the grievance of the Revenue only as the respondent has not chosen to assail the order of ITAT.

5. At the time of hearing of the appeal, learned Senior Advocate representing the Revenue has laid challenge only to the issue of deletion of additional amount of Rs. 6,41,11,013/- by CIT(A) and affirmed by ITAT. It has been argued that the substantial question of law on which appeal is admitted has to be adjudicated in the context of the issue of said deletion, which according to Revenue was result of perverse findings on facts, recorded by the CIT(A) and ITAT.

6. On the other hand, Sh. Vishal Mohan, learned counsel for the respondent has submitted that the jurisdiction of this Court under Section 260A of the Act is restricted to adjudication only on substantial questions of law. It has been submitted by him that concurrent findings of fact recorded by CIT(A) as well as ITAT on the issue of deletion of Rs.6,41,11,013/- are perfectly based on the material available before the authorities.

7. Perusal of assessment order dated 9.11.2011 reveals that the Assessing Authority had made an addition of Rs.6,41,11,013/- on the premise that the respondent/assessee had failed to provide details of all such lands/areas, which were shown as nonmarketable, non- usable and non-salable. The respondent in its return of income for assessment year 2009-10 had shown an area of 65051.34 sq. mtr. as sold during the relevant year for Rs. 22,73,07,500/- and the average cost of land sold was shown as Rs. 2488.77 per sq. mtr. which included the purchase price and development cost of the land sold. The assessee had reduced the cost of land (3000 sq. mtr.) under Tube well and (88292 sq. mtr.) as cost of the land under non-marketable area. The Assessing Authority had not accepted the exclusion of the area 88292 sq. mtr. and accordingly the addition as noticed above was made.

8. The order of Assessing Authority nowhere reveals that he was in possession of any material to discredit the contention of respondent/assessee as to exclusion of 88292 sq. mtr. of area as nonmarketable. The Assessing Authority also does not appear to have entered into any investigation in this regard. The CIT (A) while dealing with this issue has specifically noticed in its order dated 24.9.2012 that the claim of respondent was supported by site development plans and the layout maps of the Davni Industrial Area/Estate, which showed various patches of land belonging to the government and not to the respondent. This finding of fact was concurred by ITAT. Nothing has been brought to the notice of this Court by the Revenue to show that such finding of fact recorded by CIT(A) and affirmed by ITAT was not borne from to the records and hence perverse. Thus, the Revenue/appellant has failed to substantiate its contention regarding perversity of findings recorded by the CIT(A) and ITAT. The substantial question of law is answered accordingly.

9. In light of above discussion, the appeal is dismissed with no orders as to cost.

Pending applications, if any, also stand disposed of.

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