Income Tax Appellate Tribunal - Hyderabad
Andhra Pradesh State Electricity Board vs Income-Tax Officer on 31 December, 1993
Equivalent citations: [1994]49ITD552(HYD)
ORDER
R.P. Garg, Accountant Member
1. The question for determination in all these appeals is as to the fee to be paid for filing the appeal before the Tribunal under Section 253(6) of the Income-tax Act, 1961.
2. The issue in these appeals can be classified into four categories as follows :
I. Where the income originally assessed is more than Rs. 1 lakh but after first appellate order it is reduced below Rs. 1 lakh.
II. Where the income before set off of unabsorbed depreciation and business losses is more than Rs. 1 lakh but is reduced to nli. upon such set off.
III. Where the total income computed is a loss but that loss is more than Rs. 1 lakh.
IV. Where the total income is below Rs. 1 lakh but if agricultural income is taken into consideration it exceeds Rs. 1 lakh.
3. IT Appeal Nos. 576 and 577/Hyd/1993 fall under Category-1. The income determined as per assessment order is Rs. 1,07,950 for asst. year 1979-80 which is reduced to Rs. 57,950 consequent to the order of the Commissioner (Appeals). It is Rs. 1,71,740 for assessment year 1980-81 and is reduced to Rs. 46,920. The orders which are under appeal before the Tribunal are the assessment orders wherein the income was determined at Rs. 1,07,950 and Rs. 1,71,740. The assessee's submission is that her income as modified consequent to the order of the Commissioner (Appeals) should be the determinative figure for the fee to be paid by the assessee. The contention of the revenue, on the other hand, is that it is the income as computed in the original assessment that must be the figure to determine the fee to be paid by the assessee.
4. Section 253(6) reads as under:
An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal made on or after the 1st day of June, 1992, irrespective of the date of initiation of the assessment proceedings relating thereto, be accompanied by a fee of,
(a) where the total income of the assessee as computed by the Assessing Officer in the case to which the appeal relates is one lakh rupees or less, two hundred and fifty rupees;
(b) where the total income of the assessee computed as aforesaid in the case to which the appeal relates is more than one lakh rupees, one thousand and five hundred rupees.
On a pLaln reading of this provision, it is clear that it is the total income as computed by the Assessing Officer in the case to which the appeal relates. Therefore, the total income which is computed by the Assessing Officer must be in the case which is in appeal. The assessment order gives birth to an appeal before the first appellate authority and an appeal then comes to the Appellate Tribunal against that order in first appeal. It is, therefore, imperative that the total income computed in that order of assessment which gives rise to appeal to the Tribunal is relevant. Any modification or alteration in the income consequent to the appellate order would not be relevant. The contention of the assessee is that the order giving effect to appellate order is also an order of assessment as held by their Lordships of the Andhra Pradesh High Court in the case of Bakellte HylamLtd. v. CIT[ 1988] 171ITR 344. It is true that the order giving effect to the order of the first appellate authority is also an order of assessment, but the income determined in that order might not be the income computed by the Assessing Officer as the Assessing Officer might just be giving effect to the appellate order and there might not be application of his mind; he would be doing a ministerial work. Again, the computation of total income by the Assessing Officer must be in the case which is in appeal before the Tribunal. When the original assessment is made subject-matter of appeal before the Tribunal, it is the income that is computed in that order which is relevant and not the income as modified, revised or computed in subsequent proceedings. Furthermore, if we accept the assessee's contention, then why stop at that order giving effect to the appellate order? It should be every subsequent order including an order giving effect to the order of the Tribunal, the Commissioner under Section 263 or Section 264, a reassessment order under Section 147,^r-eetification order under Section 154/155 and so on. It would then be very difficult -rather impossible and impracticable - to give effect to the provision. Such an interpretation, which gives absurd results, has to be avoided. We, therefore, hold that the total income which was computed in the orders of the Assessing Officer which are subject-matter of appeal before the Tribunal is relevant and if in those orders the assessed income is more than Rs. 1 lakh, a fee of Rs. 1,500 has to be paid for filing the appeal before the Tribunal. Thus, in this case, the proper fee payable by the assessee would be Rs. 1,500.
5. The fee in the second category depends upon the meaning of the term "total income". It is defined under Section 2(45) to mean total income referred to in Section 5 computed in the manner Lald down in the Act. Section 5 defines the scope of "total income" and provides that the total income of any person includes all income from whatever source derived which is received or is deemed to have been received, accrues or arises or is deemed to have accrued or arisen. Chapter III consisting of Sections 10 to 13A provides for certain incomes not forming part of total income. One such exemption is agricultural income provided under Section 10( 1) of the Act. Chapter IV provides how the total income is to be computed and Section 14 thereof provides that the computation of total income would be classified under various heads. A method is provided for computation of income under various heads in Sections 15 to 59 under this Chapter. Chapter V provides for inclusion of income of other persons in the total income of an assessee. Chapter VI provides for aggregation and set off or carry forward of losses. Chapter VIA provides for certain deductions to be made in computing the total income. On a perusal of all these provisions, it is evident that the total income is the aggregate amount of includible incomes of an assessee or other persons from all sources as reduced by the set off and carry forward of losses and deductions under Chapter VIA. If the assessee had unabsorbed depreciation of earlier years, it has to be allowed set off as per the provisions of Section 32(2) of the Act in determining the subsequent year's income wherein such unabsorbed depreciation is to be added to the amount of allowance of depreciation and deemed to be part of that allowance. This set off has to be allowed in computing the total income under the head "business income" even before aggregation of the income from all sources. The net amount after setting off unabsorbed depreciation alone enters the aggregate amount of total income. If that aggregate gives a total income of less than Rs. 1 lakh, a fee of Rs. 250 would be payable by the assessee for filing the appeal before the Tribunal, and in case that income is more than Rs. 1 lakh, the fee would be payable at Rs. 1,500. Similarly, carried forward losses are set off under the specific and particular heads as provided under Sections 71 A, 72, 72A, 73 , 74, 74A, 75, 78 and 79. Here also, it is remaining or the resultant income under that particular head which enters the aggregate of total income to be computed under the Act. Therefore, it is that aggregate of income as set off by unabsorbed losses like unabsorbed depreciation, that would be the assessee's total income and would determine the fee payable by the assessee for filing the appeal before the Tribunal. If that happens to be below Rs. 1 lakh, a fee of Rs. 250 is to be paid, and in case it is more than Rs. 1 lakh, a fee of Rs. 1,500 is to be paid. Based on this, the fees payable in the following cases would be as under:
l.T.A.No. Asst. Year TotaL income Losses of Total Fee
before set earlier year income pay
off of set off after able
losses of set
earlier yr. off
Rs. Rs. Rs. Rs.
1363/Hyd/1992 1984-85 47,42,18,060 47,42,18,060 nil 250
1364/Hyd/1992 1979-80 5,40,90,804 5,40,90,804 nil 250
1096/Hyd/1993 1989-90 1,93,447 1,93,447 nil 250
962/Hyd/1993 1990-91 1,35,200 1,35,200 nil 250
6. The third situation is in Appeals Nos. 1022 and 1023/Hyd/1993 in the case of M/s Resource Technology (P.) Ltd. Here, the total income is determined at a loss and that loss is more than Rs.l lakh, viz., Rs. 47,56,230. "Income" includes loss in the light of the decision of the Supreme Court in the cases of CIT v. Harprasad & Co. (P.) Ltd. [1975] 99 ITR 118, CITv. J.H. Gotla [1985] 156 ITR 323 and CITv. P. Doraiswamy Chetty [1990] 183 ITR 559 (SC). Therefore, where the loss determined is more than Rs. 1 lakh, the total income would be minus/negative Rs. 1 lakh or more. Any negative figure, be that Re.l or Rs. 1 lakh or more, shall always be less than any positive figure or amount, not to speak of Rs. 1 lakh. The question here, however, is not whether 'minus' is lower than 'plus' or 'negative' is lower than 'positive'; the question is in what sense the words "total income" are used in Section 253(6) of the Act. When the term "total income" could also include loss in view of the aforesaid three decisions of the Supreme Court, it would be that loss that should be the decisive factor for determining the fee payable by an assessee for filing the appeal before the Tribunal. If that loss is more than Rs. 1 lakh, the total income would be more than Rs. 1 lakh though negative, and the fee payable in such case would be Rs. 1,500 and not Rs. 250. We can look at this aspect from another angle, that is, the object with which the section was introduced. The object appears to be that the big cases involving income of more than a particular figure, positive or negative, require more time and efforts of the Tribunal to deal with. The nature of fee being compensatory, a higher fee for a bigger case could be in consonance with the object. The Board's Circular No. 636 dated 31-8-1992, relied upon by the counsels, nowhere states that if the loss is more than Rs. 1 lakh, the fee would in that case also be Rs. 250. In any case, the Board's interpretation does not bind the Tribunal in considering the provisions of the statute. We, therefore, hold that the fee payable in these two appeals would be Rs. 1,500.
7. The last situation is where the total income assessed is less than Rs. 1 lakh but if the agricultural income is considered, it becomes more than Rs. 1 lakh. This position obtains in the case of Shri N.V.Soma Raju [IT Appeal No. 961 (Hyd.) of 1993].The total income before set off in this case is Rs. 58,011. After setting off the loss, it works out to 'nil. Agricultural income as per the assessment order is Rs. 1,37,556. As discussed above, the total income is the aggregate amount of the incomes which are not excluded in computing the total income under Chapter III. Agricultural income is one income which is not to be included while computing the total income of an assessee and that is provided in Sub-section (1) of Section 10 of the IT Act. The inclusion of agricultural income for determining the tax payable by the assessee is under the Finance Act but that is only for the purpose of charging income-tax in respect of the total income and for no other purpose. The tax on the total income of the assessee other than agricultural income is determined by deeming the agricultural income as part of the total income and by this provision, it cannot be concluded that the agricultural income forms part of the total income as such. The provisions of Section 2(2) of the Finance Act, 1993, make it clear and provide that where the assessee has in the previous year any net agricultural income exceeding Rs. 600 in addition to the total income and the total income exceeds a particular amount, then the net agricultural income shall be taken into account as if the net agricultural income was comprised in the total income after the prescribed limit of the total income but without being liable to tax and this is only for purposes of charging income-tax in respect of the total income. Here, the deeming of agricultural income as part of the total income is only for a limited purpose and that deeming cannot be extended to mean that the agricultural income also formed part of the total income of the assessee for other purposes as well. The total income of the assessee other than agricultural income being less than Rs. 1 lakh, the fee in this case, therefore, would be Rs. 250.