Bombay High Court
The Pr. Commissioner Of Income Tax-5 vs Spicer India Ltd on 13 July, 2023
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
4.ITXA1458_2017.DOC
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME-TAX APPEAL NO. 1458 OF 2017
The Pr. Commissioner of Income Tax-5 ... Appellant
Versus
Spicer India Ltd. ...Respondent
Mr. Suresh Kumar for the appellant.
Mr. Sanjiv M. Shah for the respondent.
_______________________
CORAM: G. S. KULKARNI &
JITENDRA JAIN, JJ.
DATED: 13 July, 2023
_______________________
P.C.
1. We have heard Mr. Suresh Kumar, learned counsel for the appellant and Mr. Shah, learned counsel for the respondent-assessee.
2. The revenue is in appeal against the order dated 15 February, 2017 passed by the Income-tax Appellate Tribunal whereby the assessee's appeal, against the order dated 30 January, 2015 passed by the Commissioner of Income-tax (Appeals), Pune (for short "CIT(A)) under section 143(3) read with Section 263 of the Income-tax, Act, 1961 (for short "the Act"), has been dismissed as infructuous.
3. The assessment year in question is of 2006-07. There is some history of litigation, which we need to refer. The respondent-assessee filed its return of income for the A.Y. 2006-07 on 29 November, 2006 declaring total income Page 1 of 7 13 July, 2023 ::: Uploaded on - 15/07/2023 ::: Downloaded on - 16/07/2023 05:30:55 :::
4.ITXA1458_2017.DOC at Nil. The case was selected for scrutiny and thereafter assessment was framed under section 143(3) by order dated 30 December, 2009 when the total income of the assessee was determined at Nil, after allowing a deduction of Rs.13,37,07,947/- under section 10B and setting of the brought forward unabsorbed depreciation. On such backdrop, the assessment was subjected to revision under section 263 by the learned CIT, who held that the order passed by the Assessing Officer under section 143(3) of the Act was erroneous and prejudicial to the interest of revenue on account of the fact that the Assessing officer had failed to apply its mind with regard to the provisions of Section 10B(7) read with Section 80IA(8) and Section 80IA(10). The learned CIT(A) accordingly passed an order dated 25 March, 2013 under section 263 of the Act and directed the Assessing Officer to restrict the deduction under section 10B as per the directions contained in the said order. Pursuant to the directions of learned CIT, order was reframed under section 143(3) read with Section 263 by an order dated 25 March, 2013 and the total income, before setting of brought forward loss, was determined at Rs.26,72,54,965/-. Aggrieved by such order, the assessee had approached the Tribunal.
4. Before the Tribunal, on behalf of the assessee it was contended that the order passed by learned CIT under section 263 of the Act was assailed by the assessee before the Tribunal in the proceedings of Income-tax Appeal No. 1112/PN/2012, on such appeal the Tribunal by an order dated 8 July, 2015 set Page 2 of 7 13 July, 2023 ::: Uploaded on - 15/07/2023 ::: Downloaded on - 16/07/2023 05:30:55 :::
4.ITXA1458_2017.DOC aside the order passed under section 263 of the Act and thus, the consequential order passed by the Assessing Officer under section 143(3) had become redundant and for such reason the appeal would not require any adjudication. The Tribunal accepted such contention as urged on behalf of the assessee and by the impugned order has held that in view of the orders on the Section 263 proceedings, Section 263 proceedings itself being set aside, the appeal of the assessee had become infructuous.
5. We may observe that the order dated 8 July, 2015 passed by the Tribunal which inter alia set aside the order passed under section 263 of the Act was carried in appeal by the revenue before this Court in the proceedings of Income-tax Appeal No. 272 of 2016, which has been admitted by a co- ordinate Bench of this Court by order dated 1 October, 2018. The said order is required to be noted, which reads thus:
" After having heard both sides and perusing with their assistance the order of the Tribunal impugned in this Appeal, we are of the opinion that this Appeal raises substantial questions of law. It is admitted on following substantial questions of law:-
"(i) Whether on the facts, circumstances of the case and in law, the Tribunal was justified in not appreciating the fact that that by arranging its affair with the AE, the assessee has inflated the profit in India on which deduction u/s 10B is claimed and assessee has arranged its transaction to evade the taxes and the provisions of sections 10B(7) r.w.s. 80IA(10) are clearly attracted in the assessee's case?
(ii) Whether on the facts and circumstances of the case and in law, the ITAT was justified in holding Page 3 of 7 13 July, 2023 ::: Uploaded on - 15/07/2023 ::: Downloaded on - 16/07/2023 05:30:55 :::
4.ITXA1458_2017.DOC that there is no merit in invoking jurisdiction by the Commissioner u/s 263 of the Act in this case?"
2. We do not think that in the light of this order, we should reopen the finding of the Tribunal that Section 263 of the Income Tax Act, 1961 was not attracted.
3. To be heard along with Income Tax Appeal No. 765 of 2016.
4. The learned counsel for the Assessee waives service.
5. The Registrar (Judicial) / Registrar, High Court, Original Side, Bombay to ensure that the original record in relation to this Appeal is summoned from the Tribunal and offered for inspection of the parties. This paper book is treated sufficient for the purpose of admission of this Appeal. However, the Registry must further ensure preparation of complete paper book in accordance with the Rules. The Registry, in the first instance, must send intimation of admission of this Appeal enclosing therewith a copy of this order so as to enable the Tribunal to act accordingly."
(emphasis added)
6. We have heard learned counsel for the parties. We have also perused the order dated 8 July, 2015 passed by the Tribunal. It clearly appears from order dated 1 October, 2018 passed by this Court in Income Tax Appeal No. 272 of 2016 (supra) filed by the revenue, that adjudication by the Tribunal, was a composite adjudication on three appeals. Such adjudication included adjudication on the order passed by learned CIT under section 263 of the Act, which is now subject matter of consideration in the said appeal filed by the Revenue before this Court, which is admitted on the first question of law as framed by the Court, which is on the merits of the issues emanating from the orders passed on the Section 263 proceedings. This for the reason as the Tribunal had inter alia adjudicated on the merits of the order passed under Page 4 of 7 13 July, 2023 ::: Uploaded on - 15/07/2023 ::: Downloaded on - 16/07/2023 05:30:55 :::
4.ITXA1458_2017.DOC section 263. This Court while admitting the said appeal on the first question of law, insofar as the second question of law as raised by the Revenue was concerned, observed that in the light of the orders admitting the appeal on the first question of law, it was not necessary to reopen the findings of the tribunal, as Section 263 of the Act was not attracted.
7. In our opinion, there cannot be any other opinion attributed to paragraph 2 of the order dated 1 October, 2018 passed by this Court, that what is now for consideration of this Court in the said appeal is on the merits of the adjudication under Section 263 proceedings, thus, the issue of jurisdiction as raised by the revenue was not attracted. It appears from the Tribunal's order dated 8 July, 2015 that the assessee had not asserted any plea on jurisdiction of the CIT to invoke Section 263 proceedings but on the contrary paragraph 12 of the said order reproduces submissions of the assessee only on merits of the case.
8. In view of the our above observations we are not inclined to accept the contentions of Mr. Shah, learned counsel for the respondent-assessee, that the orders of this Court dated 1 October, 2018, when in paragraph 2 thereof observes that the Court should not re-open the finding of the Tribunal that Section 263 of the Act was not attracted, would put a quietus to the issue.
9. It is on the above conspectus, the present proceedings are required to be considered as to whether the Tribunal is correct in disposing of the appeal on Page 5 of 7 13 July, 2023 ::: Uploaded on - 15/07/2023 ::: Downloaded on - 16/07/2023 05:30:55 :::
4.ITXA1458_2017.DOC the ground that it had become infructuous. In assailing such order, the revenue has raised the following substantial question of law:
"(a) "Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in annulling the assessment order passed under Section 143(3) r.w.s. 263 of the I. T. Act, without considering the issues involved and ignoring the merits of the cases?"
(b) "Whether on the facts and circumstance of the case and in law, the Hon'ble Tribunal was justified in annulling the assessment order passed u/s 143(3) r.w.s. 263 of the Act on the basis of the submission made by the assessee that the order passed by CIT-V, Pune u/s 263(1) of the I.T. Act, has been set-aside by the Hon'ble ITAT vide ITA No.1112/PN/2012 for A.Y. 2006-07 dated 08.07.2015, without verifying that the department has already gone in further appeal against the order of Hon'ble ITAT and the matter is pending before the Hon'ble High Court?"
10. We do not find that the impugned order would give rise to the above questions of law as framed and posed for our consideration by the revenue.
However, the decision which would be rendered in Income Tax Appeal No. 272 of 2016 would have a direct bearing on the order dated 30 January, 2015 passed by the CIT(A), and subject matter of the impugned order in the present appeal. We are thus of the opinion that this Appeal is required to be admitted.
11. Hence, Admit on the following substantial question of law:
"Whether the Tribunal in disposing of the assessee's appeal by the impugned order could have ignored that the order under Section 263 proceedings were not set aside by the tribunal on the issue of jurisdiction but on adjudication on its merits."Page 6 of 7
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4.ITXA1458_2017.DOC
12. Respondents waive service. Let this Appeal be tagged along with pending Income Tax Appeal No. 272 of 2016, so that both the proceedings can be taken up for adjudication.
(JITENDRA JAIN, J.) (G. S. KULKARNI , J.) Page 7 of 7 13 July, 2023 ::: Uploaded on - 15/07/2023 ::: Downloaded on - 16/07/2023 05:30:55 :::