Income Tax Appellate Tribunal - Mumbai
City & Industrial Development ... vs Pr. Cit -6 , Mumbai on 28 June, 2021
S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 1
The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "C", MUMBAI
BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT AND
SHRI RAVISH SOOD, JUDICIAL MEMBER
S.A. No. 63/MUM/2021
[Arising out of ITA No. 795/Mum/2021(A.Y: 2016-17)]
The City and Industrial Development Vs. Pr. Commissioner of
Corporation of Maharashtra Ltd, Income Tax -6,
―Nirmal‖, 2nd Floor, Nariman Point, Mumbai
Mumbai - 400 021
PAN No: AACCC3303K
(Applicant) (Respondent)
Applicant by : Shri Madhur Agrawal, A.R
Respondent by : Shri Vijay Kumar
Subramanyam, D.R.
Date of Hearing : 18.06.2021
Date of Pronouncement : 28.06.2021
ORDER
PER RAVISH SOOD, JM :
The assessee by filing the present application has sought restraint on the Assessing Officer from framing the assessment pursuant to the order passed by the Principal Commissioner of Income Tax-6, Mumbai (for short ‗Pr.CIT') under Sec. 263 of the Income-tax Act, 1961 (for short ―Act‖), dated 31.03.2021.
2. The genesis of the controversy leading to the filing of the present application lies in the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021. Original assessment was framed by the A.O vide his order u/s 143(3), dated 29.12.2018, wherein he had accepted the returned income filed by the assessee company. After culmination of the assessment proceedings the Pr. CIT called for the assessment records of the assessee company. The S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 2 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 Pr. CIT holding a conviction that the A.O by wrongly treating the assessee as ‗an agent' of the State Government of Maharashtra had wrongly allowed its claim for exemption of its receipts under Article 289(1) of the Constitution of India, thus, called upon it to explain as to why the assessment order passed under Sec. 143(3), dated 29.12.2018 may not be revised. In reply, the assessee on the basis of its multiple contentions tried to impress upon the Pr. CIT that the assessment order passed by the A.O u/s 143(3), dated 29.12.2018 could not be held to be erroneous within the meaning of Sec. 263 of the Act. Also the assumption of jurisdiction by the Pr. CIT u/s 263 of the Act was challenged by the assessee. However, the Pr. CIT did not find favour with the contentions that were advanced by the assessee both on merits as well as the validity of jurisdiction that was assumed by him qua the proceedings in question. The Pr. CIT further observed that the claim of the assessee that the receipts earned by it from its business activities belonged to the Government of Maharashtra and it was only acting as ‗an agent' of the State Government were totally wrong. It was observed by the Pr. CIT that the assessee was not ‗an agent' of the State Government and the tasks performed by it could not be equated with the tasks that were performed by the State Government. The Pr. CIT was of the view that as per Article 289(2) of the Constitution of India which enables the Union from imposing or authorising the imposition of any tax, the income that had accrued to the assessee was exigible to tax. The claim of the assessee that as per Article 289(1) of the Constitution of India as it was ‗an agent' of the State Government of Maharashtra, the excess of receipts over expenditure was not liable to be taxed in its hands, did not find favour with the Pr. CIT. It was observed by the Pr. CIT that as the issue whether Article 289(1) of the Constitution of India was applicable as contended by the assessee or Article 289(2) of the Constitution of India was applicable as claimed by the department was pending adjudication before the Hon'ble High Court of Bombay in the assessee's own case for A.Y 2006-07, A.Y 2007-08, A.Y 2010-11 and A.Y 2012-13, therefore, the stand taken by the A.O during the year under consideration was not only prejudicial to the interests of the S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 3 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 revenue but also erroneous as it was contrary to the stand of the department in the earlier years. Further, the Pr. CIT was also not impressed with the support that was drawn by the assessee from the orders that were passed by the Tribunal in its own case for the preceding years, viz. A.Y. 2003-04 to A.Y. 2007-08, wherein the assessee viz. CIDCO was held to be ‗an agent' of the Government of Maharashtra. It was observed by the Pr. CIT that the aforesaid orders had not attained finality and had been assailed by the department before the Hon'ble High Court of Bombay. Accordingly, on the basis of his aforesaid exhaustive deliberations the Pr.CIT vide his order passed u/s 263 of the Act, dated 31.03.2021 held the assessment order passed by the A.O u/s 143(3), dated 29.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue and set-aside the same with a direction for framing of a de novo assessment after giving an opportunity of being heard to the assessee.
3. Aggrieved, the assessee company had assailed the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021 before the Tribunal on 13.05.2021, which thereafter had been marked as ITA No. 795/Mum/2021 and is pending disposal as on date.
4. Before us, it was submitted by the ld. Authorized Representative (for short ‗A.R') for the assessee applicant, that as the assessee has a prima facie good case on merits and the balance of convenience lies in its favour, therefore, in all fairness, and in order to avoid multiplicity of litigation the A.O be restrained from passing the assessment order pursuant to the order passed by the Pr. CIT u/s 263, dated 31.03.2021. It was submitted by the ld. A.R, that the entire controversy involved in the present case hinges around the conviction of the Pr. CIT that the A.O had wrongly concurred with the assessee, and held, that as it was ‗an agent' of the Government of Maharashtra, therefore, the excess of its receipts over expenditure was not exigible to tax. In order to buttress his aforesaid claim that no infirmity did emerge from the well reasoned view taken by the A.O that the assessee S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 4 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 company was acting as ‗an agent' of the Government of Maharashtra, it was submitted by the ld. A.R that the said issue was squarely covered by the orders passed by the co-ordinate benches of the Tribunal in the assessee's own case viz A.Y 2014-15 in ITA No. 2840/Mum/2019, dated 16.10.2019; and
(ii) A.Y 2015-16 in ITA No. 1278 /Mum/2021, dated 28.09.2020, wherein involving identical facts in both the years the respective orders passed by the Pr. CIT-15, Mumbai u/s 263 of the Act had been set-aside by the Tribunal. It was, thus, submitted by the ld. A.R that the issue involved in the present appeal, on merits, was squarely covered by the aforementioned respective orders passed by the Tribunal in the assessee's own case. Apart from that, it was submitted by the ld. A.R that the Pr. CIT had wrongly assumed jurisdiction u/s 263 of the Act only with the purpose of substituting his view as against that arrived at by the A.O on the basis of a detailed inquiry. In order to fortify his claim that the A.O had taken a correct view that the assessee was acting as ‗an agent' of the Government of Maharashtra, the ld. A.R took us through the relevant excerpts of the aforesaid application filed before us. It was vehemently averred by the ld. A.R that in case if the A.O is not restrained from framing the de novo assessment pursuant to the order passed by the Pr. CIT u/s 263 of the Act, then, the same would result to multiplicity of litigation that otherwise could have been avoided. On a specific query by the bench as regards the period of limitation within which the assessment order giving effect to the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021 was to be passed, it was submitted by the ld. A.R that the same was to be framed latest by 31.03.2022.
5. Per contra, the ld. Departmental Representative (for short ‗D.R') strongly objected to the seeking of restraint on the A.O in passing the assessment order pursuant to the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021. It was submitted by the ld. D.R that the powers vested with the Tribunal u/s 254(2A) were restricted to grant of stay on the recovery of demand, and not otherwise. It was, thus, submitted by the ld. D.R. that as S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 5 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 the present application filed by the assessee was devoid and bereft of any merit, therefore, the same was liable to be rejected.
6. We have heard the ld. authorized representatives for both the parties and perused the application filed by the assessee applicant before us. As observed by us hereinabove, it is the claim of the ld. A.R that as the assessee has a prima facie good case on merits and the balance of convenience lies in its favour, therefore, in all fairness, and in order to avoid multiplicity of litigation, the A.O be restrained for a period of 6 months from framing a de novo assessment pursuant to the directions given by the Pr. CIT vide his order passed u/s 263 of the Act, dated 31.03.2021. On the contrary, the ld. D.R had strongly objected to the aforesaid seeking of restraint by the assessee.
7. After giving a thoughtful consideration to the issue before us, we think it apt, to herein observe, that the exercise of powers by the Income-tax Appellate Tribunal have to strictly remain within the scope and gamut of those conferred upon it by the legislature in all its wisdom. Before adverting to and dealing with the issue in hand, we may, herein observe, that framing of a de novo assessment by an A.O pursuant to the directions given by the Pr. CIT u/s 263 of the Act has to be within the specified time period as had been spelled out in unequivocal terms in sub-section (3) to Sec. 153 of the Act. Only exception for extending the stipulated time period for giving effect to the order passed by the Pr. CIT u/s 263 can be found in the ‗first proviso' to sub-section (5) of Sec. 153 of the Act, which contemplates, that in a case effect is to be inter alia given by the A.O to an order passed under Sec. 263, wholly or partly, otherwise than by making a fresh assessment or reassessment, the period therein specified can be extended in a case where a request is made by the A.O to the Pr. CIT or CIT, that for reasons beyond his control, it is not possible for him to give effect to such order within the stipulated time period, pursuant whereto, on satisfaction of the Pr. CIT or CIT an additional period of six months to give effect to the order may be allowed. However, as in the case before us the Pr. CIT had directed the A.O to frame a de novo assessment, S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 6 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 therefore, the ‗first proviso' to sub-section (5) of Sec. 153 and the extension therein contemplated would not be applicable. As such, in the case before us the de novo assessment as had been directed by the Pr. CIT vide his order passed u/s 263, dated 31.03.2021, without any choice, has to be framed by the A.O within a period of twelve months from the end of the financial year in which order u/s 263 was passed by the Pr. CIT. We find, that the legislature in all its wisdom had expressly vide ‗Explanation 1' to Sec. 153 of the Act carved out certain circumstances wherein the period involved is to be excluded for computing the period of limitation, which reads as under (relevant extract) :
"Explanation 1.--For the purposes of this section, in computing the period of limitation--
(i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proviso to section 129; or
(ii) the period during which the assessment proceeding is stayed by an order or injunction of any court; or
(iii) the period commencing from the date on which the Assessing Officer intimates the Central Government or the prescribed authority, the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via) of clause (23C) of section 10, under clause (i) of the proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order withdrawing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or
(iv) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and--
(a) ending with the last date on which the assessee is required to furnish a report of such audit under that sub-section; or
(b) where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or
(v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or
(vi) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of section 158A and ending with the date on which the order under sub-section (3) of that section is made by him; or
(vii) in a case where an application made before the Income-tax Settlement Commission is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which an application is made before S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 7 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 the Settlement Commission under section 245C and ending with the date on which the order under sub-section (1) of section 245D is received by the Principal Commissioner or Commissioner under sub-section (2) of that section; or
(viii) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Principal Commissioner or Commissioner under sub- section (3) of section 245R; or
(ix) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Principal Commissioner or Commissioner under sub- section (7) of section 245R; or
(x) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or
(xi) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub- section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer, shall be excluded‖ Although, we find, that as per clause (ii) of ―Explanation 1‖ to Sec. 153 of the Act, the period during which the assessment proceedings are stayed by an order or injunction of any court, the period therein involved is to be excluded for the purpose of computing the limitation for framing the assessment, reassessment and re-computation as envisaged in the said statutory provision, however, no such exclusion has been carved out by the legislature in all its wisdom in a case where the assessment proceedings are stayed by an order passed by the Tribunal. Accordingly, it is in the backdrop of the aforesaid mandate of law that we shall herein deal with the request of the assessee for restraining the A.O from framing the de novo assessment in pursuance to the order passed by the Pr. CIT u/s 263, dated 31.03.2021.
8. Adverting to the claim of the assessee that it has a good case on merits, without expressing any opinion, we prima facie find substantial force in the same, for the reason, that the issue involved in the present appeal, viz. as to S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 8 The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 whether or not the assessee is ‗an agent' of the state government of Maharashtra, as claimed by the ld. A.R is squarely covered by the respective orders passed by the Tribunal in the assessee's own case, viz. (i) A.Y 2014- 15, in ITA No. 2840/Mum/2019, dated 16.10.2019; and (ii) A.Y 2015-16 in ITA No. 1278/Mum/2020, dated 28.09.2000, wherein the respective orders passed by the Pr. CIT-15, Mumbai u/s 263 of the Act, involving identical facts are stated to have been set-aside by the Tribunal.
9. In the backdrop of our aforesaid deliberations, though, we remain conscious of the fact that circumscribed by the prescribed time limitation for framing of an assessment pursuant to an order passed by the Pr. CIT u/s 263 of the Act, there is an innate limitation on staying of the assessment proceedings, but then, at the same time we cannot also remain oblivious of the fact that in case the aforesaid request of the assessee is rejected at the threshold, the same may result to multiplicity of litigation which could otherwise have been avoided. We, thus, adopting a cautious but not a pedantic approach, though, refrain from restraining the A.O from proceeding with the assessment proceedings, however, at the same time, in all fairness herein direct him not to pass the assessment order giving effect to the order passed by the Pr. CIT u/s 263 of the Act, dated 31.03.2021 for a period of three months from the date of this order or till the disposal of the appeal filed by the assessee before us i.e against the order passed by the Pr. CIT u/s 263, dated 12.03.2021, whichever is earlier.
10. Resultantly, the application filed by the assessee is allowed subject to our aforesaid observations.
Order pronounced in the open court on 28.06.2021
Sd/- Sd/-
Pramod Kumar Ravish Sood
(VICE PRESIDENT) (JUDICIAL MEMBER)
Mumbai, Date: 28.06.2021
PS: Rohit
S.A. No. 63/Mum/2021 A.Y. 2016-17 (Arising out of ITA No.795/Mum/2021) 9
The City & Industrial Development Corporation of Maharashtra Ltd. Vs. Pr. CIT-6 Copy of the Order forwarded to :
1. Assessee
2. Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. DR "C" Bench, ITAT, Mumbai
6. Guard File BY ORDER, Dy./Asst. Registrar ITAT, Mumbai