COMM. OF INCOME TAX GUNTUR V. K.VENKATESWARULU CHIRALA

ITTA/49/2002

AI Insights

The case involves multiple Income Tax Tribunal Appeals (I.T.T.A) where the Revenue challenged the decisions of the Deputy Commissioner of Income Tax (Appeals) that allowed the deduction of 40% of the incentive bonus claimed under Section 10 (14) of the Income Tax Act, 1961. The Income Tax Officer had initially disallowed this claim, which was contested and reversed by the Deputy Commissioner of Income Tax (Appeals). The Revenue's subsequent appeals to the Income Tax Appellate Tribunal were also dismissed, leading to the present appeals. The core legal issue revolved around the interpretation and application of Section 143 (1) (a) concerning prima facie adjustments and the debatable nature of the deduction claim.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 681261 (HC-INDIA)
• Appeal Type: Others
• Pronouncement Date: 24-04-2012
• Assessment Year: misc
• Other Referred Cases: Kvaverner John Brown Engg. (India) P.Ltd v. Asst. C.I.T (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Keywords: Conflicting Judgments; Exemption Claim; Incentive bonus; Income Tax; Prima facie adjustments
• Section: 154; 10(14); 143(1)(a); 143(1A)

Judgement Text

" THE HON'BLE MR JUSTICE V ESWARAIAH And THE HON’BLE SRI JUSTICE K.G.SHANKAR I.T.T.A.No.42 of 2001, I.T.T.A.Nos.27, 49, 101 of 2002 AND I.T.T.A.No.203 of 2003 DT.24-04-2012 Between: … Appellant And … Respondents Counsel for the Appellant: Sri Counsel for respondent: Sri The Court made the following Judgment: THE HON'BLE MR JUSTICE V ESWARAIAH And THE HON’BLE SRI JUSTICE K.G.SHANKAR I.T.T.A.No.42 of 2001, I.T.T.A.Nos.27, 49, 101 of 2002 AND I.T.T.A.No.203 of 2003 COMMON JUDGMENT: Per Hon’ble Sri Justice V.Eswaraiah) Sri J.V.Prasad, the learned Standing Counsel for Income Tax submits that all these appeals are covered by the Judgment of the Hon’ble Supreme Court in Kvaverner John Brown Engg. (India) P.Ltd v. Asst. C.I.T (SC) against the Revenue and are liable to be dismissed. It is stated that while processing the returns of the respondents’ assessees under Section 143 (1) (a) of the Income Tax Act, 1961 (for short ‘the Act’) 40% of the incentive bonus towards the claim of exemption under Section 10 (14) of the Act was disallowed, against which, the application filed under Section 154 of Act before the Income Tax Officer was also rejected. Against the said order of the Income Tax Officer, the assessees filed appeals before the Deputy Commissioner of Income Tax (Appeals) and the Deputy Commissioner of Income Tax (Appeals) allowed the appeals following certain decisions of the Income Tax Appellate Tribunals wherein it was held that the deduction in respect of the incentive bonus should be allowed at 40%. Against the said orders of the Deputy Commissioner of (Appeals), the Revenue filed the appeals before the Income Tax Appellate Tribunal and the Tribunal dismissed the appeals, against which these appeals are filed. It is stated that deduction of 40% of the bonus at the relevant point of time was a debatable issue and therefore the Income Tax Officer ought not to have rejected the claim of the respondents’ assesses. The Hon’ble Supreme Court in Kvaverner John Brown Engg. (India) P.Ltd (supra) at paragraph 6 held as follows: “We find merit in this civil appeal. As stated above, we are concerned with the assessment years 1996-97 and 1997- 98. One of the main conditions stipulated by way of the first proviso to Section 143 (1) (a), as it stood during the relevant time, referred to prima facie adjustments. The first proviso permitted the Department to make adjustments in the income or loss declared in the return in cases of arithmetical errors of in cases where any loss carried forward or deduction or disallowance which on the basis of information available in such return was prima facie admissible but which was not claimed in the return or in cases where any loss carried forward, or deduction or allowance claimed in the return which on the basis of information available in such return was prima facie inadmissible. In the present case, therefore, when there were conflicting judgments on interpretation of Section 80O, in our view, prima facie adjustments contemplated under Section 143 (1) (a) was not applicable and, therefore, consequently appellant was not liable to pay additional tax under Section 143 (1A) of the 1961 Act.” In view of the aforesaid Judgment of the Hon’ble Supreme Court in Kvaverner John Brown Engg. (India) P.Ltd (supra), the appeals filed by the Revenue are liable to be dismissed and accordingly they are dismissed. No costs. ______________ V. ESWARAIAH,J _______________ K.G.SHANKAR,J Date: 24-04-2012 grk THE HON'BLE MR JUSTICE V ESWARAIAH And THE HON’BLE SRI JUSTICE K.G.SHANKAR (The Judgment of the Bench delivered by Hon’ble Sri Justice V.Eswaraiah) I.T.T.A.No.42 of 2001, I.T.T.A.Nos.27, 49, 101 of 2002 AND I.T.T.A.No.203 of 2003 DT.24-04-2012 "