CIT Vs Gurdaspur Co-operative Sugar Mills Ltd. (Punjab and Haryana High Court)
The Punjab and Haryana High Court dismissed appeals filed under Section 260A of the Income Tax Act, 1961 against an order of the Income Tax Appellate Tribunal (ITAT), Amritsar, which had set aside a penalty of ₹10.5 crore imposed under Section 271(1)(c). The penalty was levied on the ground that the assessee had furnished inaccurate particulars by treating a grant-in-aid of ₹2.15 crore from the State Government as a capital receipt instead of a revenue receipt.
Read SC Judgment in this case: SC Dismisses Penalty as Capital vs Revenue Receipt Issue Held Debatable
The Court examined whether the Tribunal erred in deleting the penalty. It noted that there was no dispute regarding the receipt of the grant; the only issue was its classification as capital or revenue. The revenue relied on a Delhi High Court judgment concerning denial of deduction under Section 80-O due to non-furnishing of expense details. However, the Court held that such reliance was misplaced, as that case involved lack of factual disclosure, whereas the present case involved a debatable issue of classification.
The High Court concluded that the nature of the grant-in-aid—whether capital or revenue—was a debatable issue and did not amount to furnishing inaccurate particulars. It found no error in the Tribunal’s decision to delete the penalty and held that no substantial question of law arose for consideration. Accordingly, the appeals were dismissed.
