GUJARAT POWER CORPORATION LTD. V. ADDL. CIT

TAXAP/209/2013

AI Insights

The case involves multiple tax appeals filed by both the revenue and the assessee against the judgments and orders passed by the Income Tax Appellate Tribunal for various assessment years. The primary legal contention revolves around the disallowance of certain tax deductions and the exclusion of lease rent from the total income of the assessee. Both parties agreed to remand the appeals to the Tribunal for a detailed reconsideration of the specified issues, acknowledging that these matters were not adequately addressed in the initial hearings.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 756143 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 13-08-2013
• Assessment Year: misc
• Other Referred Cases: IndusInd Bank Vs. Additional Commissioner of Income-tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S N DIVETIA
• Assessee Lawyers: S UDHIR M EHTA
• Keywords: Depreciation; Income Tax; Lease Rent; Sale and Lease Back Assets
• Section: 37(1); 35E

Judgement Text

"O/TAXAP/203/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 203 of 2013 With TAX APPEAL NO. 205 of 2013 With TAX APPEAL NO. 206 of 2013 With TAX APPEAL NO. 207 of 2013 With TAX APPEAL NO. 209 of 2013 With TAX APPEAL NO. 211 of 2013 With TAX APPEAL NO. 213 of 2013 With TAX APPEAL NO. 215 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ====================================== COMMISSIONER OF INCOME TAX GANDHINAGAR....Appellant(s) Versus GUJARAT POWER CORPORATION LTD....Opponent(s) ====================================== Page 1 of 7 O/TAXAP/203/2013 JUDGMENT Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 MR SN DIVATIA, ADVOCATE for the Opponent(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI Date : 13/08/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. As for the reasons stated hereinafter there is a broad consensus between the learned advocates appearing on behalf of the respective parties to remand the respective appeals to the Income Tax Appellate Tribunal to consider the following questions of law raised in the respective appeals, all these appeals are disposed of by this common order. 2. Tax Appeal No. 203/2013 is preferred by the revenue against the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 84/2007 with respect to the Assessment Year 2003-04. 2.1. Tax Appeal No. 205/2013 is preferred by the revenue against the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 1468/2007 with respect to the Assessment Year 2004-05. 2.2. Tax Appeal No. 206/2013 is preferred by the revenue against the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 3578/2008 with respect to the Assessment Year 2005-06. Page 2 of 7 O/TAXAP/203/2013 JUDGMENT 2.3. Tax Appeal No. 207/2013 is preferred by the revenue against the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 1669/2009 with respect to the Assessment Year 2006-07. 2.4. In all these appeals, the revenue has proposed the following substantial question of law; “Whether on the facts and circumstances of the case, the Hon’ble Tribunal is right in excluding the principal portion of lease rent from the total income of the assessee?” 2.5. Tax Appeal No. 209/2013 has been preferred by the assessee challenging the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 2943/2006 with respect to the Assessment Year 2003-04. 2.6. Tax Appeal No. 211/2013 has been preferred by the assessee challenging the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 1338/2007 with respect to the Assessment Year 2004-05. 2.7. Tax Appeal No. 213/2013 has been preferred by the assessee challenging the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 3578/2008 with respect to the Assessment Year 2005-06. 2.8. Tax Appeal No. 215/2013 has been preferred by the assessee challenging the impugned judgment and order passed by the Income Tax Appellate Tribunal in ITA No. 1286/2009 with respect to the Assessment Year 2006-07. Page 3 of 7 O/TAXAP/203/2013 JUDGMENT 3. In the aforesaid appeals preferred by the assessee the proposed questions are with respect to disallowance under Section 35E / 37(1) of the Income Tax Act and with respect to disallowance of depreciation of sale and lease back assets. It is required to be noted that the contention on behalf of the assessee with respect to Section 37(1) of the Income Tax Act is an alternative submission, if their contention with respect to Section 35E is not accepted. 4. It is reported that question no. 2 i.e. disallowance of depreciation of sale and lease back assets has a direct connection with respect to question of law proposed by the revenue in their respective appeals i.e. Tax Appeal Nos. 203/2013, 205/2013, 206/2013 and 207/2013. 5. Shri S.N. Divetia, learned advocate appearing on behalf of the assessee in Tax Appeal Nos. 209/2013, 211/2013, 213/2013 and 215/2013 has vehemently submitted that the tribunal in the impugned order has noted that there has been no arguments under Section 35E of the Income Tax Act. It is submitted that as such the same was very much seriously argued and it is to be noted that it was seriously argued before the CIT(A) also. It was submitted that the aforesaid aspect was seriously pressed and argued even before the tribunal. It is submitted that despite the above, the tribunal has observed that there has been no serious arguments on eligibility under Section 35E of the Income Tax Act. It is submitted that when it was pointed out by filing rectification applications, the said rectification applications have been rejected by the tribunal. It is submitted that thus the tribunal Page 4 of 7 O/TAXAP/203/2013 JUDGMENT has not considered the aforesaid issue with respect to eligibility and disallowance under Section 35E of the Income Tax Act in detail and on merits. It is further submitted by Shri Divetia, learned advocate that the submissions were also made that the alternative question be allowed under Section 37(1) of the Act. It is submitted that the same is also not considered. 6. It is submitted that with respect to question no. 2 i.e. disallowance on depreciation of sale and lease back assets, though there was no concession given by the assessee and in fact it was seriously pressed into service, the same has not been considered by the tribunal. It is therefore requested to remand the appeals to the tribunal to consider the aforesaid questions. 7. Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue has submitted that if this Court is inclined to remand the appeals to the tribunal to consider the aforesaid questions, their appeals, being Tax Appeal Nos. 203/2013, 205/2013, 206/2013 and 207/2013, are also required to be remanded to the tribunal to consider the question of law with respect to excluding the principal sum of lease rent. 8. To the aforesaid Shri Divetia, learned advocate appearing on behalf of the assessee has stated at the bar that he has no objection if the appeals preferred by the revenue to consider the aforesaid questions are remanded to the tribunal. 9. Thus, there is a broad consensus between the learned advocates appearing on behalf of the respective parties i.e. the assessee and the revenue to remand the appeals to the Page 5 of 7 O/TAXAP/203/2013 JUDGMENT Income Tax Appellate Tribunal to consider the aforesaid questions, more particularly, the questions, which are raised in the present appeals. 10. The learned advocates appearing on behalf of the respective parties do not invite any further reasoned order as the matters are being remanded to the tribunal and any observations made by this Court may prejudice the case of either parties before the tribunal. 11. In view of the above broad consensus recorded hereinabove and the serious grievance made by the learned advocate appearing on behalf of the assessee that the tribunal has not considered the aforesaid issues on merits by observing that no serious arguments with respect to the same have been made by the learned advocate appearing on behalf of the assessee and the learned advocate appearing on behalf of the assessee has seriously disputed the above observations, and it is the specific case on behalf of the assessee that all the aforesaid grounds were pressed into service very seriously and arguments were also made, we deem it fit to remand the matters to the tribunal to decide the aforesaid questions afresh in accordance with law on on its own merits. 12. In view of the above and for the reasons stated hereinabove, the present Tax appeals, being Tax Appeal Nos. 203/2013, 205/2013, 206/2013, 207/2013 preferred by the revenue as well as Tax Appeal Nos. 209/2013, 211/2013, 213/2013 and 215/2013 preferred by the assessee are hereby allowed in part and respective ITA Nos. 84/2007, 1468/2007, 3578/2008 and 1669/2009 with respect to Assessment Years Page 6 of 7 O/TAXAP/203/2013 JUDGMENT 2003-04, 2004-05, 2005-06 and 2006-07 are hereby remanded to the Income Tax Appellate Tribunal to consider the following issues/questions; (i) disallowance under Section 35E / 37(1) of the Income Tax Act; (ii) disallowance of depreciation of sale and lease back assets; and (iii) exclusion of the principal sum of lease rent. 13. The Income Tax Appellate Tribunal to consider the aforesaid appeals afresh with respect to the aforesaid issues in accordance with law and on its own merits and after giving an opportunity to the assessee as well as the revenue. However, it is observed that this Court has not expressed anything on merits with respect to the aforesaid issues and the question whether the decision of the Special Bench of the tribunal rendered in the case of IndusInd Bank Vs. Additional Commissioner of Income-tax reported in [2012] 19 taxmann.com 173 (Mumbai) (Special Bench) would be applicable with respect to the aforesaid issues or not, is kept open. 14. With this, all these appeals are disposed of. (M.R.SHAH, J.) (MS SONIA GOKANI, J.) Siji Page 7 of 7 "