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2013 (11) TMI 1436 - HC - Income TaxNirgam Mulya Consideration for grant of exclusive privilege for selling country liquor - Held that - Following The Commissioner of Income-tax, Lucknow vs. M/s. Ram Sanehighat, Barabanki 2005 (4) TMI 545 - ALLAHABAD HIGH COURT - Nirgam Mulya was not form part of the purchase price of country liquor but it is consideration paid by the State Government for party privilege Decided against Revenue.
Issues:
1. Inclusion of Nirgam Mulya in the purchase price for computing business profits under Section 44AC of the Income Tax Act, 1961. 2. Applicability of the decision in the case of A. Sanyasi Rao (219 ITR 330) to determine whether Nirgam Mulya should be included in the purchase price. 3. Treatment of expenses on glasses and kulhars as part of the purchase price for computing business profits. Issue 1: The appeal involved the question of whether Nirgam Mulya should be included in the purchase price for computing business profits under Section 44AC of the Income Tax Act, 1961. The respondent, a U.P. Excise contractor for country liquor, had initially declared his total income, and the Assessing Officer treated Nirgam Mulya as not consideration for the exclusive privilege of selling country liquor. The Commissioner of Income Tax (Appeals) partly allowed the appeal, excluding Nirgam Mulya from the purchase price. The Tribunal upheld this decision. The High Court referred to a previous case where it was held that Nirgam Mulya was not part of the purchase price but a consideration paid by the State Government for the privilege. Consequently, the High Court found no legal infirmity in the Tribunal's order and dismissed the appeal. Issue 2: The second issue revolved around the applicability of the decision in the case of A. Sanyasi Rao (219 ITR 330) to determine whether Nirgam Mulya should be included in the purchase price. The Income Tax Appellate Tribunal had considered this aspect, leading to a dispute regarding the inclusion of Nirgam Mulya in the purchase price for computing business profits. However, the High Court did not find it necessary to delve into this issue extensively as it primarily focused on the previous case law that clarified the nature of Nirgam Mulya as a consideration for the privilege granted by the State Government. Issue 3: The final issue centered on whether expenses on glasses and kulhars should be considered part of the purchase price for computing business profits. The Income Tax Appellate Tribunal had ruled that these expenses did not form part of the purchase price. The High Court did not provide an extensive analysis of this specific issue in the judgment, as the primary focus was on the treatment of Nirgam Mulya in the purchase price calculation. Consequently, the High Court did not find any legal infirmity in the Tribunal's decision regarding the treatment of expenses on glasses and kulhars. In conclusion, the High Court's judgment addressed various substantial questions of law related to the computation of business profits under the Income Tax Act, 1961. The decision primarily emphasized the treatment of Nirgam Mulya in the purchase price calculation for a U.P. Excise contractor and relied on previous case law to support the exclusion of Nirgam Mulya as part of the purchase price. The judgment provided a detailed analysis of the issues raised and upheld the Tribunal's decision, ultimately dismissing the appeal.
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