M/s. Karnataka Soaps & Detergents Ltd., Bangalore V. DCIT, Bangalore

ITA 303/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0609 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 09-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: S ANANDAKRISHNA
• Section: 274

Judgement Text

PAGE 1 OF 4 ITA NO.303/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A' BEFORE SHRI K P T THANGAL, VICE PRESIDENT AND SHRI N L KALRA, A.M. ITA NO.303/BANG/09 (ASST. YEAR 2003-04) KARNATAKA SOAPS & DETERGENTS LTD., BANGALORE PUNE HIGHWAY, BANGALORE. - APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, JSS TOWERS, 100 FT ROAD, RING ROAD, BANASHANKARI III STAGE, BANGALORE-85. - RESPONDENT APPELLANT BY : SHRI S ANANDAKRISHNA RESPONDENT BY : SHRI JASON P BOAZ O R D E R PER N L KALRA : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF LEARNED CIT(A)-II, BANGALORE DATED 23RD MARCH, 2009 . 2. IN THIS CASE, THE APPELLANT IS A STATE PUBLIC S ECTOR UNDERTAKING. THE ISSUE OF MAINTENANCE OF APPEAL BE FORE THE TRIBUNAL BY THE STATE PUBLIC SECTOR UNDERTAKING HAS BEEN CON SIDERED BY THE BANGALORE BENCH IN THE CASE OF BANGALORE WATER SUPP LY & SEWERAGE BOARD. THE TRIBUNAL VIDE PARAS 2 TO 4 OF THE ORDER DATED 20TH AUGUST, 2009 HELD AS UNDER:- '2. AT THE OUTSET OF HEARING, LEARNED DR POINTED OUT THAT THE ASSESSEE HAS NOT OBTAINED PAGE 2 OF 4 ITA NO.303/BANG/2009 2 APPROVAL FROM COMMITTEE OF DISPUTES. WE FIND THAT THE MATTER OF DISPUTE BETWEEN A PUBLIC SECTOR UNDERTAKING AND THE GOVERNMENT AS LAID DOWN BY THE SUPREME COURT IN ONGC V COLLECTOR OF CENTRAL EXCISE (1995) SUPP (40 SCC 541) AND IN OTHER CASES, HAS SET GUIDELINES IN SUCH MATTERS. WHETHER THIS REQUIREMENT OF PRIOR CLEARANCE FROM A GOVERNMENT COMMITTEE IS NECESSARY EVEN IN RESPECT OF A DISPUTE BETWEEN SUCH PUBLIC SECTOR UNDERTAKINGS AND THE STATE GOVERNMENT IS NOW A LIVE ISSUE. APPROVAL BY A DIFFERENT COMMITTEE OF DISPUTES (COD) WITH STATE PARTICIPATION WAS HELD TO BE A REQUIREMENT AS DECIDED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMILNADU WAREHOUSING CORPORATION V DEPUTY CIT (2009) 209 ITR 252. HON'BLE RAJASTHAN HIGH COURT IN THE STATE OF RAJASTHAN V ITAT (2003) 259 ITR 686 AND CIT V DELHI TOURISM AND TRANSPORTATION DEVELOPMENT CORPORATION LTD. (2005) 274 ITR 35 (DELHI) ALSO REQUIRED SUCH CLEARANCE. BUT THE HON'BLE ANDHRA PRADESH HIGH COURT IN ANDHRA PRADESH POWER GENERATION LTD. V ASST. CIT (2006) 280 ITR 388 (AP) TOOK THE VIEW THAT THE RULE IN ONGC'S CASE HAS NO APPLICATION, WHERE STATE GOVERNMENT WAS A PARTY FOLLOWED BY THE TRIBUNAL IN DEPUTY CIT V MAHARASHTRA STATE ROAD TRANSPORT CORPORATION (2006) 284 ITR (AT) 602 (MUM) (SB). THE SAME ISSUE HAS COME UP BEFORE THE HON'BLE GUJARAT HIGH COURT IN GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. V ITAT (2009) 314 ITR 14, WHICH FOLLOWED THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COURT THAT PRIOR APPROVAL IS NOT NECESSARY. THE HON'BLE MADRAS HIGH COURT'S VIEW, WHICH HAD PROVIDED A MECHANISM ACCEPTABLE TO THE STATE GOVERNMENT WITH STATE PARTICIPATION IN COMMITTEE OF DISPUTES (COD), IN LINE WITH THE SUPREME COURT GUIDELINES IN ONGC AND OTHER CASES, WOULD BE A BETTER OPTION. PAGE 3 OF 4 ITA NO.303/BANG/2009 3 3. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A STATE GOVERNMENT PUBLIC SECTOR UNDERTAKING AND THERE IS NO CLEARANCE FROM HIGH POWER COMMITTEE. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMILNADU WAREHOUSING CORPORATION (SUPRA) HAS HELD THAT THE DISPUTE BETWEEN GOVERNMENT DEPARTMENTS WOULD NOT BE CONTESTED IN THE COURTS. THE STATE/UNION OF INDIA MUST EVOLVE A MECHANISM FOR RESOLVING THE INTERDEPARTMENTAL CONTROVERSIES. THE COMMITTEE WOULD CONSISTS OF CHIEF SECRETARY, SECRETARY OF DEPARTMENTS CONCERNED, SECRETARY OF LAW AND SECRETARY OF FINANCE WHERE FINANCIAL CONSTRAINTS ARE INVOLVED. THE DECISION OF SUCH COMMITTEE SHOULD BE BINDING ON ALL THE DEPARTMENTS CONCERNED. IT WAS FURTHER HELD THAT IT WOULD BE OBLIGATION ON EVERY TRIBUNAL AND EVERY COURT WHERE SUCH DISPUTE IS RAISED HEREAFTER TO OBTAIN CLEARANCE FROM COMMITTEE. IN ABSENCE OF CLEARANCE, PROCEEDINGS SHOULD NOT BE PROCEEDED WITH. HON'BLE MADRAS HIGH COURT IN THE CASE OF M/S MADRAS FERTILIZERS LTD. V DCIT (2008) 298 ITR 136 (MAD.) HELD THAT IN CASE OF PUBLIC SECTOR UNDERTAKINGS, WHERE THERE IS NO CLEARANCE FROM THE HIGH POWER COMMITTEE THE APPEAL WAS TO BE DISMISSED WITH LIBERTY TO REVIVE THE APPEAL. 4. FOLLOWING THE ABOVE SAID DECISIONS IN TAMILNADU WAREHOUSING CORPORATION (SUPRA), WE DISMISS THE APPEALS FILED BY THE ASSESSEE IN ABSENCE OF COD APPROVAL. HOWEVER, THE ASSESSEE IS AT LIBERTY TO REVIVE THE APPEALS IN QUESTION BY OBTAINING THE APPROVAL FROM COD AS MANDATED BY THE HON'BLE MADRAS HIGH COURT OR BY BRINGING TO OUR KNOWLEDGE THAT FORMATION OF SUCH COMMITTEE HAS NOT BEEN INITIATED AS HELD BY PUNE BENCH IN THE CASE OF M/S MAHARASHTRA WAREHOUSING CORPORATION. SIMILAR VIEW HAS BEEN TAKEN BY BANGALORE BENCH IN ITA NOS.1384 TO 1389/08 DATED 31.07.2009 IN THE CASE OF DCIT V M/S KARNATAKA LAND ARMY CORPORATION WHICH HAS PAGE 4 OF 4 ITA NO.303/BANG/2009 4 NOT BEEN DISPUTED BY REVENUE. IT IS PERTINENT TO MENTION HERE THAT SINCE WE ARE DISMISSING THE APPEALS, WE ARE REFRAINING FROM MAKING ANY COMMENT ON THE ISSUE AT HAND'. 3. FOLLOWING THAT ORDER, THE APPEAL IS HELD AS NOT MAINTAINABLE. THE APPELLANT WILL BE ENTITLED TO GE T THE APPEAL REVIVED AFTER GETTING CLEARANCE FROM COD OR AFTER ESTABLISH ING THE FACT THAT SUCH COD EXISTS. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON 9TH OCTOBER, 2009. SD/- SD/- (K P T THANGAL) (N L KALRA) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DTD.09/10/2009 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT (A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF, ITAT, NEW DELHI. MSP/01.10. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.