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 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. 2 ITA No.470 of 2006 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 3