The ACIT, Circle-1, Bhavnagar V. Patson laboratories Pvt. Ltd., Bhavnagar

ITA 151/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1856 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-12-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 09-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Difference of opinion; Tax effect

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, A-BENCH, AHMEDABAD. BEFORE: SHRI T.K. SHARMA, JUDICIAL MEMBER , AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER. ITA NO.151/AHD/2007 ASSESSMENT YEAR : 1999-2000 ACIT, CIRCLE-1, AAYKAR BHAVAN, NAKUBAUG, JASHONATH CHOWK, BHAVNAGAR-364 001 M/S. PATSON LABORATORIES PVT. LTD., PLOT NO.345, PHASE II, GIDC CHTRA, BHAVNAGAR. (APPELLANT) VERSUS (RESPONDENT) PAN: AABCP7164J FOR THE APPELLANT: ANAND MOHAN SR. D.R. FOR THE RESPONDENT SHRI. NONE ORDER PER T K SHARMA (JUDICIAL MEMBER): THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APP EALS)-XIX, AHMEDABAD, IN APPEAL NO.CIT(A)-XIX/25/CIR.1/BNR/05-06 DATED 30 .01.2006. THE ASSESSMENT WAS FRAMED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, BHAVHAGAR VIDE HIS ORDER DATED 23.03.2005 FOR THE A SSESSMENT YEAR 1999- 2000. 2. 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 . THE ASSESSEE FILED CALCULATION OF TAX EFFECT, WHEREIN T HE QUANTUM UNDER DISPUTE IS AMOUNTING TO RS.3,84,724/- AND THE TAX EFFECT ON TH IS IS LESS THEN RS.2 LACS. WHEN THIS WAS CONFRONTED TO THE DR, HE HAS NOT DISP UTED THE SAME. 3. 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 REGARDING TAX EF FECT 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 EXCEP TIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE T IME OF DECIDING THIS 2 ITA NO.151/AHD/2007 APPEAL, IN SUCH CASES, THE TRIBUNAL WILL HAVE TO GI VE 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 CT R 389 (BOM), THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / IN STRUCTIONS ISSUED BY THE BOARD ARE APPLICABLE 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 BOM BAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIAL NOTICE OF THE MO NEY VALUE HAVING GONE DOWN AND COST OF LITIGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CIRCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. THE DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEA LS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL, IRRESPECTIVE 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 TRI BUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS AND IN TERMS OF THE LAW DECLARED BY THE SUPREME COURT OR BY THE TERRITORIAL HIGH COU RT. HOWEVER, ON THIS GROUND THE MATTERS CANNOT BE REMANDED TO TH E TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DEPARTMENTAL REPRESENT ATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABI LITY OF THE CIRCULAR DESPITE THERE BEING AN EXCEPTION, THE DEPA RTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER, IN MATTERS WHERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WIT H THOSE OBJECTIONS IF THE TRIBUNAL HAS DISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER, AN INDULGE NCE IS REQUIRED TO BE SHOWN BY THIS COURT AND FOR THIS LIM ITED PURPOSES, THE DEPARTMENT IS PERMITTED TO MOVE AN APPROPRIATE APPLICATION 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 CIRCULAR THE TRI BUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIGHTAG E SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE CIRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE, THE NEWLY INSERTED PROVISIO NS CONTAINED IN SECTION 268A(4) MAKE IT OBLIGATORY FOR THE TRIBU NAL TO CONSIDER SUCH CIRCULAR. IT IS NOT OPEN FOR THE DEPARTMENT T O CONTEND THAT CIRCULARS ARE INTERNAL MATTERS OF THE DEPARTMENT AN D ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS O F 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, INSTRUCTIONS OR CIRCULARS. THIS WOULD NOT AMOUNT T O TAKING AWAY THE RIGHT OF FILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIVE INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW 3 ITA NO.151/AHD/2007 RECOGNIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. I T IS ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR THE TERRITOR IAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION, IT IS NO T OPEN TO THE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCRIBING THE MONETARY LIMIT SHOULD BE GIVEN EFFE CT TO AND NOT THE DECISION OF HONBLE SUPREME COURT OR THE TERRIT ORIAL HIGH COURT. IT IS, HOWEVER, EQUALLY TRUE THAT THE TRIBUN ALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DECISION OF THE HONBLE SUPREME COURT OR THE HIGH C OURT. AN OBJECTION MUST BE RAISED BY THE DEPARTMENTAL REPRES ENTATIVE. 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 TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHILE APPLYING THE RELEVANT CIRCUL AR TO THE FATS OF THE CASE AT THE TIME OF DECIDING APPEALS. 4. 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 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 LA W IS INVOLVED OR NOT. THE LD DR STATED THAT IN THESE APPEALS THE ISSUES A RE FACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVIDED BY BOARDS INSTRUCTION OR ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIG H COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN BOARDS 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. 4 ITA NO.151/AHD/2007 (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. 5. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFFE CT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CONCORD PHARMACEUTICALS (SUPRA), WE DISMISS THIS APPEAL OF THE REVENUE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 17 TH DECEMBER, 2009. SD/- SD/- (D.C. AGRAWAL) ( T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED: 17/12/2009 PARAS# COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.