The ITO, Ward-15(4), Ahmedabad V. Shri Rameshbhai Madhavlal Rathod, Ahmedabad

ITA 1076/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6100 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-06-2010
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Question of law; Difference of opinion; Tax effect
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.1076/AHD/2010 A. Y.: 2008-09 THE INCOME TAX OFFICER, W- 15(4), 4 TH FLOOR, NATURE VIEW BUILDING, ASHRAM ROAD, AHMEDABAD VS SHRI RAMESHBHAI MADHAVLAL RATHOD, B-15, MANOKAMNA TENEMENTS, VATVA ROAD, ISHANPUR, AHMEDABAD PA NO. ABTPR 7932E (APPELLANT) (RESPONDENT) ITA NO.1077/AHD/2010 A. Y.: 2008-09 THE INCOME TAX OFFICER, W- 15(4), 4 TH FLOOR, NATURE VIEW BUILDING, ASHRAM ROAD, AHMEDABAD VS SHRI SURESH GOBINDRAM GEHANI, B-8, SHREENATH APARTMENT, B/H GOPAL TOWER, MANINAGAR, AHMEDABAD PA NO. ACHPG 8060B (APPELLANT) (RESPONDENT) APPELLANT BY SMT. NEETA SHAH, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LEARNED CI T(A)-XXI, AHMEDABAD DATED 29-01-2010 AND 25-01-2010 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE DELETION OF ADDITION OF RS.5,00,000 /- U/S 10(10C) OF THE IT ACT RELYING ON THE DECISIONS OF ITAT AHMEDABAD A ND MUMBAI BENCHES RAISING THE ISSUE THAT THE DECISIONS OF THE BENCHES PERTAIN TO OERS SCHEME OF RESERVE BANK OF INDIA AND NOT OF STATE BA NK OF PATIALIA OR STATE BANK OF INDIA. ITA NO.1076 AND 1077/AHD/2010 ITO, W-15(4), AHMEDABAD VS RM RATHOD AND CG GEHANI 2 2. THE AO NOTICED THAT THE ASSESSEE HAD OPTED FOR E ARLY RETIREMENT AND CLAIMED EXEMPTION U/S 10 (10C) OF THE IT ACT IN A SUM OF RS.5,00,000/-. IT WAS NOTED THAT SUCH EXEMPTION IS AVAILABLE IF VOLUNTARY RETIREMENT SCHEME SATISFIES THE GUIDELINES LAID DOW N IN RULE 2BA OF THE IT RULES. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A ) THAT SIMILAR SCHEME WAS INTRODUCED BY RESERVE BANK OF INDIA IN THE NAME OF OPTIONAL EARLY RETIREMENT SCHEME (OERS) AND THE ITAT MUMBAI BENCH IN THE CASE OF VAISHALI A. SHELAR ALLOWED DEDUCTION IN FAVOUR OF T HE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ITAT AHMEDABAD BENCH IN THE CASE OF SMT. JAYA NARAYANAN AND OTHERS DATED 17-07-2007 IN ITA NO.120 9/AHD/2007 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IT WAS SUBMITTED THAT THE SCHEME OF RESERVE BANK OF INDIA AND THE BANK OF THE ASSESSEE ARE SIMILAR; THEREFORE, THE ASSESSEE IS ENTITLED FOR DE DUCTION. THE LEARNED CIT(A) FOLLOWED THE ORDER OF THE ITAT AHMEDABAD BEN CH IN THE CASE OF SMT. JAYA NARAYANAN AND OTHERS (SUPRA) AND HELD THA T THE FACTS OF THE CASE ARE IDENTICAL FROM THAT CASE, THEREFORE, THE A SSESSEE IS ENTITLED FOR DEDUCTION U/S 10(10C) OF THE IT ACT. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING OF THE APPEAL. HOWEVER, WRITTEN SUBMISSION IS FILED IN PAPER BOOK REITERATING THE SAME SUBMISSIONS AND IT IS ALSO STATED THAT IN THE SIMILAR CIRCUMSTANCES AND IDENTICAL GROUNDS ITAT AHMEDABAD BENCH IN ITA NO.171/AHD/2010 DATED 09-02-2010 DISMISSED THE DEPA RTMENTAL APPEAL BEING THE LOW TAX EFFECT BY FOLLOWING THE CIRCULAR OF THE BOARD AS WELL AS THE DECISION OF THE JURISDICTIONAL GUJARAT HIGH COU RT IN THE CASE OF CIT VS CONCORD PHARMACEUTICALS. COPY OF THE ORDER IS PLACE D ON RECORD. IT IS ALSO STATED THAT THE ISSUE IS COVERED IN FAVOUR OF THE A SSESSEE. 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER OF THE AO BUT DID NOT DISPUTE THAT TAX EFFECT IS BELOW RS.2 L ACS IN BOTH THE APPEALS. ITA NO.1076 AND 1077/AHD/2010 ITO, W-15(4), AHMEDABAD VS RM RATHOD AND CG GEHANI 3 5. AT THE OUTSET, IT IS NOTICED THAT THE TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED LIMIT UNDER INSTRUCTION NO.2/2005 DATED 24-10-2005 AND THE TAX EFFECT ON THIS IS LESS THEN RS.2 LACS. WHE N THIS WAS CONFRONTED TO THE DR, HE HAS NOT DISPUTED THE SAME. 6. IT SEEMS THAT RECENTLY HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT V. CONCORD PHARMACEUTICALS IN TAX APPEAL NO.402/2001 VIDE ORDER DATED 05-08-2008 HAS FINALLY SETTLED THE ISSUE REGA RDING TAX EFFECT CASES. 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 / INSTR UCTIONS. IN CIT V. PITHWA ENGINEERING WORKS 276 ITR 519 (BOM), THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIA L NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGA TION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CI RCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. TH E DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEA LS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL, IRRES PECTIVE OF THEIR DATE OF FILING. 21. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF 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 ITA NO.1076 AND 1077/AHD/2010 ITO, W-15(4), AHMEDABAD VS RM RATHOD AND CG GEHANI 4 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 BEING A N EXCEPTION, THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER, IN MATTERS W HERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS D ISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER, AN INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AN D FOR THIS LIMITED PURPOSES, THE DEPARTMENT IS PERMITTED TO MO VE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DEC IDING THE APPEAL ON MERITS. 22. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPEAL I S FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIG HTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE C IRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE, THE NEWLY INS ERTED PROVISIONS CONTAINED IN SECTION 268A(4) MAKE IT OBL IGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCULAR. IT IS NOT OPEN FOR THE DEPARTMENT TO CONTEND THAT CIRCULARS ARE INTERNAL M ATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE T HAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS, INSTRUCTIONS OR CI RCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF F ILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIV E 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 PRESCR IBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT TH E DECISION OF HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT . 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. 23. CONSIDERING ALL THE AFORESAID ISSUES, WE DISMIS S ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTME NT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL ITA NO.1076 AND 1077/AHD/2010 ITO, W-15(4), AHMEDABAD VS RM RATHOD AND CG GEHANI 5 EITHER IN THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THAT A PARTICULAR APP EAL IS COVERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFECT. IT IS E XPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHIL E APPLYING THE RELEVANT CIRCULAR TO THE FACTS OF THE CASE AT T HE TIME OF DECIDING APPEALS. 7. AT THE TIME OF HEARING BEFORE US, THE LD. DEPART MENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH, WHETHER THIS APPEAL FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDED IN BO ARDS INSTRUCTION NO.2/2005 DATED 24-10-2005, THE SUBJECT-MATTER OF THE APPEALS ARE COVERED BY ANY OF THE JUDGMENT OF JURISDICTIONAL HI GH COURT OR OF SUPREME COURT, ANY SUBSTANTIAL QUESTION OF LAW IS I NVOLVED OR NOT. THE LD DR STATED THAT IN THESE APPEALS THE ISSUES ARE F ACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVIDED BY BOARD S INSTRUCTION OR ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN B OARDS INSTRUCTION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOULD 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. 8. WE FIND THAT THESE APPEALS RELATE TO LOW TAX EFF ECT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CONCORD ITA NO.1076 AND 1077/AHD/2010 ITO, W-15(4), AHMEDABAD VS RM RATHOD AND CG GEHANI 6 PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CONCORD PHARMACEUTICALS (SUPRA), WE DISMISS BOTH THE APPEALS OF THE REVENU E. ORDER PRONOUNCED IN THE OPEN COURT ON 04-06-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 04-06-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD