The ACIT, Circle-15, Ahmedabad V. Shri Arvind U.Vyas, Ahmedabad

ITA 1053/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5842 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-06-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Difference of opinion; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI N.S.SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 18.06.10 DRAFTED ON: 18.06.10 ITA NO.1051/AHD/2010 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-15, AHMEDABAD 4 TH FLOOR, NATURE VIEW BLDG. ASHRAM ROAD, AHMEDABAD. VS. SHRI PARSOTTAM KANJIBHAI SOLANKI B-28, MANNOKAMNA TENAMENT, OPP. KHARAWAL FACTORY, VATVA ROAD, ISANPUR, AHMEDABAD. PAN/GIR NO. : AGDPS 4115 P ITA NO.1052/AHD/2010 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-15, AHMEDABAD 4 TH FLOOR, NATURE VIEW BLDG. ASHRAM ROAD, AHMEDABAD. VS. SMT. MEENAKSHI SHIVLAL CHHUNCHHA, 43, SURUCHI APARTMENTS, B/H. DOCTOR HOUSE, ELLISBRIDGE, AHMEDABAD. PAN/GIR NO. : ABTPC 3668A (APPELLANT) .. (RESPONDENT) APPELLANT BY : K. MADHUSUDAN SR. D.R. RESPONDENT BY: WRITTEN SUBMISSION ITA NO.1053/AHD/2010 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-15, AHMEDABAD 4 TH FLOOR, NATURE VIEW BLDG. ASHRAM ROAD, AHMEDABAD. VS. SHRI ARVIND U. VYAS B-30, ASHOK TENAMENTS, OPP. CADILA LABORATORIES, AHMEDABAD. PAN/GIR NO. : ABHV 1020H (APPELLANT) .. (RESPONDENT) APPELLANT BY : K. MADHUSUDAN SR. D.R. RESPONDENT BY: SHRI P. F. JAIN - 2 - ITA NO.1054/AHD/2010 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-15, AHMEDABAD 4 TH FLOOR, NATURE VIEW BLDG. ASHRAM ROAD, AHMEDABAD. VS. SHRI RAMANLAL CHHABILDAS PATHAK 74, SUNDERVAN HOUSING SOCIETY, NR. MAFATLAL, NAVSARI PAN/GIR NO. : ABLPP 4104G (APPELLANT) .. (RESPONDENT) APPELLANT BY : K. MADHUSUDAN SR. D.R. RESPONDENT BY: WRITTEN SUBMISSION O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -XXI, AHMEDABAD, PASSED IN THE APPEAL FILED BY FOUR DIFFE RENT ASSESSEES, DATED 25.01.2010, 1.01.2010, 11.01.2010 AND 04.01.2 010. 2. THE COMMON GROUNDS OF APPEAL TAKEN IN ALL THE AP PEALS BY THE REVENUE ARE AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.5,00,000/- U/S.10(10C) OF THE I.T.ACT, RELYING ON THE VARIOUS DECISIONS OF CA LCUTTA HIGH COURT AND DECISIONS OF HON'BLE ITAT OF MUMBAI AND AHMEDABAD. 2. THE DECISION QUOTED BY THE LD.CIT(A) DOES NOT FA LL INTO FOUR CORNERS OF THIS CASE AS IT PERTAINS TO OERS SC HEME OF RBI AND NOT STATE BANK OF PATIALA OR STATE BANK OF INDIA. 3. THE LD.CIT(A) HAS IGNORED THE CIRCULAR NO.F.NO.200/34/2009-ITA.I DATED 6.10.2009 OF CBDT ACCORDING TO WHICH EMPLOYEES OF STATE BANK OF PATIA LA AND STATE BANK OF INDIA ARE NOT ELIGIBLE FOR DEDUCT ION U/S.10(10C) OF THE INCOME TAX ACT, 1961. - 3 - 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED B EFORE US THAT IN ALL THE ABOVE APPEALS, THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) HAS DELETED THE ADDITION MADE BY THE A O OF RS.5,00,000/- BY DISALLOWING THE CLAIM FOR DEDUCTIO N UNDER SECTION 10(10C) OF THE ACT TO THE ASSESSEE ON ACCOUNT OF EX-GRATIA PAYMENT RECEIVED BY THE ASSESSEE ON HIS OPTING FOR EXIT OPT ION SCHEME OF STATE BANK OF INDIA AND AS THE TAX EFFECT IN THIS A PPEAL IS BELOW RS.2,00,000/- IN VIEW OF THE CBDT INSTRUCTION NO.2/ 2005 DATED 24- 10-2005, ALL THE APPEALS FILED BY THE REVENUE ARE N OT MAINTAINABLE. 4. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT V. CONCORD PHARMACEUTICALS REPORTED IN (2009) 317 ITR 395 (GUJ) HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASE S. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 20. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE OF FILING OF AN APPEAL, A CIRCULAR IS NOT IN FORCE OR CERTAIN EXCEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DECIDING THIS APPEAL, IN S UCH CASES, THE TRIBUNAL WILL HAVE TO GIVE DUE WEIGHTAGE TO THE PROVISIONS CONTAINED IN THE CIRCULAR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE A PPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P) LTD.,(2008) 214 CTR 389 (BOM), THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE AP PLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS, SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTRUCTIONS. IN CIT V. PITHWA ENGINEERING WORKS 276 ITR 519 (BOM), THE BOM BAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIAL NOTIC E OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, T HE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CIRCULAR EVE N TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. THE DEPARTMEN T SHOULD NOT HAVE PROCEEDED WITH THE APPEALS / REFERENCES WH EREIN THE TAX IMPACT IS MINIMAL, IRRESPECTIVE OF THEIR DATE O F FILING. 21. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF - 4 - LAW IS IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS REPEATEDLY ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COURT OR SUPREME COURT , THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS A ND IN TERMS OF THE LAW DECLARED BY THE SUPREME COURT OR BY THE TERRITORIAL HIGH COURT. HOWEVER, ON THIS GROUND THE MATTERS CA NNOT BE REMANDED TO THE TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DE PARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEI NG AN EXCEPTION, THE DEPARTMENT HAS MISSED THE BUS AND SE COND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER , IN MATTERS WHERE SUCH OBJECTIONS ARE RAISED AND DESPIT E THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS DISMISSED THE APPEAL ONLY ON THE GROUN D OF LOW TAX EFFECT IN SUCH MATTER, AN INDULGENCE IS REQUIRE D TO BE SHOWN BY THIS COURT AND FOR THIS LIMITED PURPOSES, THE DEPARTMENT IS PERMITTED TO MOVE AN APPROPRIATE APPL ICATION BEFORE THE TRIBUNAL FOR DECIDING THE APPEAL ON MERI TS. 22. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIR CULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERIT S. DUE WEIGHTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNA L TO THE CIRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE, THE NEWLY INSERTED PROVISIONS CONTAINED IN SECTION 268A(4) MA KE IT OBLIGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCUL AR. IT IS NOT OPEN FOR THE DEPARTMENT TO CONTEND THAT CIRCULARS A RE INTERNAL MATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJEC T TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE THAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS, INSTR UCTIONS OR CIRCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY TH E RIGHT OF FILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED B Y EXECUTIVE INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOG NIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION, IT IS NOT OPEN TO T HE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRE SCRIBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT TH E DECISION OF HONBLE SUPREME COURT OR THE TERRITORIAL HIGH CO URT. IT IS, HOWEVER, EQUALLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DE CISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OB JECTION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. - 5 - 23. CONSIDERING ALL THE AFORESAID ISSUES, WE DISMIS S ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTMENT ONL Y ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNA L EITHER IN THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THAT A PARTICULAR APPEAL IS COV ERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL H AS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL O N THE GROUND OF LOW TAX EFFECT. IT IS EXPECTED FROM THE T RIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHILE APPLYING THE R ELEVANT CIRCULAR TO THE FATS OF THE CASE AT THE TIME OF DEC IDING APPEALS. 5. AT THE TIME OF HEARING BEFORE US, THE LD. DEPAR TMENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH, WHETHER THESE APPEALS FALL UNDER ANY OF THE EXCEPTIONS AS PROVIDE D IN BOARDS INSTRUCTION NO.2/2005 DATED 24-10-2005, THE SUBJECT -MATTER OF THE APPEALS ARE COVERED BY ANY OF THE JUDGMENT OF JURIS DICTIONAL HIGH COURT OR OF SUPREME COURT, ANY SUBSTANTIAL QUESTION OF LAW IS INVOLVED OR NOT. THE LD. DR STATED THAT IN THESE A PPEALS THE ISSUES ARE FACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTI ONS AS PROVIDED BY BOARDS INSTRUCTION OR ANY OF THE CRITERIA LAID DOW N BY THE HONBLE HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS ( SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN BOARDS INSTRUCT ION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHO ULD BE CONTESTED IRRESPECTIVE OF REVENUE EFFECT: (I) WHERE REVENUE AUDITED OBJECTION IN THE CASE HA S BEEN ACCEPTED B THE DEPARTMENT (II) WHERE THE BOARDS ORDER, NOTIFICATION, INSTRUC TION OR CIRCULAR IS THE SUBJECT-MATTER OF AN ADVERSE ORDER. (III) WHERE PROSECUTION PROCEEDINGS ARE CONTEMPLATE D AGAINST THE ASSESSEE. (IV) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVI SIONS OF THE ACT ARE UNDER CHALLENGE. 6. WE FIND THAT THESE APPEALS RELATE TO LOW TAX EF FECT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF - 6 - CONCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLO WING CONCORD PHARMACEUTICALS (SUPRA), WE DISMISS THESE APPEALS O F THE REVENUE. 7. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. 8. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH DAY OF JUNE, 2010. SD/- SD/- (MUKUL SHRAWAT ) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 30 TH DAY OF JUNE, 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XXI, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 18.06.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 28.06.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 29.06.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 29.06.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 30.06.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 30.06.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 30.06.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------