DEPUTY COMMISSIONER OF INCOME TAX - 4(3)(1), MUMBAI V. TAJ IRON AND STEEL WORKS PRIVATE LIMITED, MUMBAI

ITA 4382/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7909 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 13-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency
• Section: 143(3); 142(1); 143(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO.4382 /MUM/201 7 ( / ASSESSMENT YEAR: 20 12 - 13 ) ACIT 4(3)(1) R. NO.649, 6 TH FLOOR, AAY AKAR BHAVAN, MUMBAI - 400020 . / VS. M/S. TAJ IRON & STEEL WORKS PVT. LTD. 4 TH FLOOR, CARMELOS BUILDING, PATHAK WADI, L. T. ROAD, MUMBAI - 400002. ./ ./ PAN/GIR NO. : AAACT5807H ( / APPELLANT ) . . ( / RESPONDENT ) / DATE OF HEARING: 04 /0 3 /20 20 /DATE OF PRONOUNCEMENT: 25 /0 8 / 20 20 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 20 . 0 3 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 9 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2 0 12 - 1 3 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' I. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CI T(A) ERRED IN DELETING THE AO TO DELETE THE ADDITION MADE OF RS.3,38,00,000/ - TOWARDS PAYMENT MADE TO MUMBAI PORT TRUST CLAIMED BY ASSESSEE U/S 23 OF THE I. T. ACT AS DEDUCTION FROM HOUSE PROPERTY INCOME. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH MAY BE NECESSARY. ' REVENUE BY : SHRI V. JUSTIN (DR) ASSESSEE BY: SHRI VIPUL JOSHI / SHUBHAM RATHI ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 2 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED I TS RET URN OF INCOME ON 18 .09.20 1 2 DECLARING TOTAL LOSS TO THE TUNE AT RS. 1,66,15,745 / - . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY WAS EARN ING THE IN COME FROM PROPERTY AND INCOME FROM INVESTMENT . THE ASSESSEE HAS SHOWN THE INCOME FROM HOUSE PROPERTY AND CLAIMED DEDUCTION U/S 23 OF THE ACT. THE ASSESSEE CLAIM ED THE DEDUCTION IN SUM OF RS. 3,36,94,037/ - UNDER THE HEAD OF MUNICIPAL TAXES. THE ASSESSEE ALSO CLAIMED THE SOME EXPENSES AND RENT PAID TO BPT(BOMBAY PORT TRUST) .THE NOTICE WAS GIVEN REGARDING GENUINENESS OF THE CLAIM. A FTER THE REPLY, THE CLAIM OF THE ASSESSEE WAS DECLINED AND A SUM OF RS. 3,38,00,000/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 1,21,94,830/ - . FE ELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE , THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 4. THE ONLY ISSUE WHICH HAS BEEN RAISED BY THE REVENUE BEFORE US IS THAT THE CIT(A) HAS WRONGLY DELETED THE ADDITION RAISED IN SUM OF RS.3,38,00,000/ - TOWARDS PAYMENT MADE TO MUMBAI PORT TRUST CLAIMED BY ASSESSEE U/S 23 OF THE ACT. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5.3 HAVE CONSIDERED OF THE AO AS WELL AS SUBMISSIONS OF THE APPELLANT. AT THE SET, THERE IS NO DISPUTE TO THE FACT THAT THE APPELLANT IS THE OWNER OF THE PROPERTY AT THE BPT FOR THE PUR POSES OF SECTION 22 / 23 OF THE ACT. THE AO HAS IN FACT TAXED THE INCOME (RAIN RENT RECEIVED BY THE APPELLANT AS INCOME FROM HOUSE PROPERTY OF THE APPELLANT. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE APPELLANT HAS ACTUALLY PAID GROUND RENT ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 3 CHARGES TO T HE I3I1' DURING THE RELEVANT PREVIOUS YEAR AS WELL AS THE EARLIER YEARS. IT IS ALSO UNDISPUTED THAT THE SAME WAS PAID IN PURSUANCE OF THE ORDER PASSED BY THE HON'BLE SUPREME COURT. A COPY OF WHICH HAS BEEN PERUSED BY ME AT PAGE NO.58 TO 83 OF PAPER BOOK OF THE APPELLANT. THE ONLY DISPUTE WHETHER THE SAME IS ALLOWABLE AS DEDUCTION AGAINST THE INCOME FROM HOUSE PROPERTY EARNED BY THE APPELLANT. IN THIS REGARD, THE ARGUMENT OF THE APPELLANT IS FOUR FOLD. FIRSTLY, IT IS ARGUED THAT TINDER THE INCOME TAX ACT ONL Y THE REAL INCOME COULD BE BROUGHT TO TAX. IN THE PRESENT CASE SINCE INCOME FROM IS TAXED ON THE BASIS OF RENT ACTUALLY RECEIVED / RECEIVABLE WHICH OF GROUND RENT TO BPT, IT IS ARGUED THAT ON THE BASIS RENT TO BPT, IT IS ARGUED THAT ON THE BASIS OF REAL IN COME THEORY THE INCOME IS NOT LIABLE TO BE READ SINCE THERE IS NO ACTUAL RECEIPT OF RENT AND ON THE CONTRARY THERE IS A LOSS. SECONDLY, IT IS ARGUED THAT THE DEDUCTION IN RESPECT OF GROUND RENT TO BPT IS ALLOWABLE AS THE SAME IS AKIN TO CERTAIN EXPENSES WH ICH HAVE TO BE INCURRED IN ORDER TO ENSURE THAT THE RENT INCOME IS REGULARLY RECEIVED. ACCORDING TO THE APPELLANT SUCH EXPENSES ARE ALLOWABLE EVEN IF NOT SPECIFICALLY PROVIDED UNDER THE ACT. IN THIS REGARD THE APPELLANT HAS RELIED ON VARIOUS JUDGEMENTS WHE REIN EXPENSES LIKE SOCIETY MAINTENANCE CHARGES, BROKERAGE CHARGES, SECURITY CHARGES, ETC. HAVE BEEN ALLOWED AS A DEDUCTION FROM THE INCOME FROM HOUSE PROPERTY THOUGH THEY HAVE NOT BEEN SPECIFICALLY PROVIDED UNDER THE ACT. THIRDLY AND LASTLY, IT IS ARGUED T HAT THE PAYMENT TO BPT IN RESPECT OF GROUND RENT IS NOTHING BUT AKIN TO SERVICE TAXES LEVIED BY A LOCAL AUTHORITY. IN THIS REGARD, THE APPELLANT HAS STATED THAT THE AO ERRED IN INTERPRETING THE TERM LOCAL AUTHORITY AS LOCAL GOVERNMENT AND THEREBY DENYING T HE DEDUCTION. THE APPELLANT HAS ALSO RELIED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN ITS OWN CASE AND ALSO IN THE CASE OF M/S DWARKADAS MARFATIA AND SONS V/S BOARD OF TRUSTEES OF THE PORT OF BOUT BAY (1989) 3 SCC 293 IN ORDER TO CONTEND THAT BPT IS AUTHORITY AND HENCE GROUND RENT PAID TO BPT IS IN THE NATURE OF SERVICE TAXES LEVIED BY A LOCAL AUTHORITY AND I THEREFORE ELIGIBLE FOR DEDUCTION U/S 23 R.W.S. 27(VI) OF THE ACT. FOURTHLY, IT HAS BEEN ARGUED THAT THE DEDUCTION IN RESPECT OF GROUND RENT AGA INST THE RENT INCOME HAS BEEN CLAIMED BY THE APPELLANT SINCE THE LAST MANY YEARS AND HAS ALSO BEEN ALLOWED BY THE AO. IN FACT IN AY 2010 - 11 THE SAID AMOUNT OF GROUND RENT WAS ALLOWED AS A DEDUCTION UNDER SCRUTINY ASSESSMENT FRAMED U/S 143 (3) OF THE ACT. A S SUCH THE APPELLANT HAS ARGUED THAT IT SHOULD BE ALLOWED THE CLAIM OF DEDUCTION IN RESPECT OF GROUND RENT. ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 4 BEFORE PROCEEDING TO DECIDE THE ISSUE IT IS USEFUL TO EXTRACT THE RELEVANT PROPERTY SHALL BE DEEMED TO PROVISIONS OF SECTION 23 OF THE ACT AS FOLLOW S.: - 'FOR THE PURPOSES OF SECTION 22, BE (A) A SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPE CT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE; OR (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE PROVIDED THAT THE TAXES LEVIED BY ANY LOCAL AUTHORITY IN RESPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRE SPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAW SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD OF ACCOUNTING REGULARS EMPLOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THAT PREVIOUS YEAR IN WHICH SUCH TAXES ARE A CTUALLY PAID BY HINT' IT IS CLEAR FROM A PLAIN READING OF THE SAID PROVISO THAT TAXES PAID TO A LOCAL AUTHORITY AND ALLOWABLE AS DEDUCTION. FURTHER AS PER SECTION 27(VI), THE AMOUNTS ELIGIBLE FOR DEDUCTION ALSO INCLUDES PAYMENTS IN THE NATURE OF SERVICE TA XES LEVIED BY THE AUTHORITY. AS SUCH THE DEDUCTION IS TO BE ALLOWED TO THE ASSESSEE IF THE AMOUNTS PAID ARE IN THE NATURE OF SERVICES TAXES AND THE SAME ARE ACTUALLY PAID DURING THE YEAR TO A LOCAL AUTHORITY. AT THIS JUNCTURE, IT IS USEFUL TO REFER THE JUD GEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C1T VS. M.G. CHITNAVIS (1957)32 1TR 520 (BOMBAY). IN THAT CASE, IT WAS HELD THAT AMOUNTS PAID IN RESPECT OF WATER RATES AND CONSERVANCY TAX TO NAGPUR MUNICIPAL CORPORATION WAS ALLOWABLE AS A DEDUCTION FROM THE INCOME FROM HOUSE PROPERTY. IN THAT CASE, THE TERM 'TAXES IN RESPECT OF THE PROPERTY' WAS BROADLY VIEWED SO AS TO EVEN INCLUDE WATER RATES AND CONSERVANCY TAXES. THESE ITEMS WERE TREATED AS AKIN TO TAXES SINCE THE SAME WERE AMOUNTS COLLECTED IN LI EU OF SERVICES RENDERED BY THE CORPORATION. DRAWING AN ANALOGY FROM THE SAID RULING, IT HAS TO BE HELD THAT FOR THE PURPOSE OF ALLOWING THE USE OF RE OF GROUND RENT CHARGED TO BE HELD AS SERVICE TAXES IN RESPECT OF THE ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 5 PROPERTY. AS REGARDS THE SECOND REQUI REMENT THAT THE PAYMENT SHOULD BE MADE TO A LOCAL AUTHORITY, THERE IS NOT MUCH DIFFICULTY TO ASCERTAIN WHETHER THE BPT IS A LOCAL AUTHORITY. IN THIS REGARD IT IS USEFUL TO REFER TO THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF M/S. DWARKADAS MARFA TIA AND SONS VS. BOARD OF TRUSTEES OF THE PORT OF BOMBAY (1989) 3 SCC 293 WHEREIN THE HON'BLE SUPREME COURT HAS ITSELF HELD THAT MUMBAI PORT TRUST IS AN AUTHORITY. FURTHER THE JUDGEMENT IN THE CASE UP JAI NIGAM (SUPRA) ALSO SUPPORTS THE CASE OF THE APPELLA NT. FURTHER THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. R. VENUGOPAL REDDIAR (1968) 58 ITR 439 (MADRAS) HAS HELD THAT TAXES PAID TO EVEN A LOCAL AUTHORITY OUTSIDE INDIA IN A FOREIGN COUNTRY IS ELIGIBLE FOR DEDUCTION U/S 23 OF THE ACT. THE HIGH COU RT CATEGORICALLY HELD THAT THERE CAN BE NO RIGID RESTRAINT IN INTERPRETING THE EXPRESSION LOCAL AUTHORITY AS USED IN SECTION 23. ON THE BASIS OF THE ABOVE I FIND FORCE IN THE ARGUMENT OF THE APPELLANT THAT THE TERM LOCAL AUTHORITY CANNOT BE RIGIDLY INTERPR ETED TO MEAN ONLY A LOCAL GOVERNMENT AS HAS BEEN INTERPRETED BY THE AO IN THIS CASE. AS SUCH THE MUMBAI PORT TRUST HAS TO BE TREATED AS A LOCAL AUTHORITY U/S 23 OF THE ACT. IN VIEW OF THE ABOVE IT HAS TO BE HELD THAT THE AMOUNT OF GROUND RENT RS.3,36,94,03 7/ - PAID TO BPT IS ALLOWABLE AS A DEDUCTION U/S 23 OF THE ACT. I FIND IT FIT TO CONSIDER EVEN THE OTHER ARGUMENT RAISED BY THE APPELLANT IN THIS REGARD. THE SAME IS WITH REGARD TO THE DEDUCTION OF GROUND RENT BEING AKIN TO SOCIETY MAINTENANCE CHARGES, SECU RITY CHARGES, BROKERAGE, ETC. I FIND THAT IN ALL THE DECISIONS RELIED ABOVE BY THE APPELLANT IT HAS BEEN HELD THAT WHEN THE RECEIPT OF RENT IS BURDENED WITH THE DISCHARGING OF CERTAIN OUTGOINGS THE SAME HAVE TO BE ALLOWED AS A DEDUCTION AGAINST THE RENT IN COME. FOR EXAMPLE, IN SOME OF THE ABOVE CASES IT HAS BEEN HELD THAT SOCIETY MAINTENANCE CHARGES ARE ALLOWABLE AS A DEDUCTION AGAINST RENT INCOME RECEIVED. IN FACT SUCH CASES STRONGLY SUPPORT THE CASE OF THE APPELLANT SINCE IT IS COMMON KNOWLEDGE THAT 'MAIN TENANCE CHARGES HAVE TO BE PAID BY THE OWNER IRRESPECTIVE OF THE FACT THAT THE APPELLANT NON - PAYMENT OF THE GRA THE PREMISES BY THE APPELLANT. AS (APPELLANT HAS TO BE ACCEPTED. IS LET OUT OR NOT WHILE IN THE CASE OF LEAD TO EVICTION AND VACATION OF ARGUMEN T THE CLAIM OF THE LASTLY, IT IS ALSO SEEN BY THE APPELLANT HAS BEEN GRANTED DEDUCTION IN RESPECT OF GROUND RENT AND THE SAME HAS BEEN ALLOWED YEAR AFTER YEAR TO APPELLANT EVEN UNDER SCRUTINY ASSESSMENTS BY THE AO HIMSELF. THE HON'BLE APEX COURT IN THE CAS E OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC) OBSERVED AS FOLLOWS: '76. WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RES - JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR M AY NOT APPLY IN THE FOLLOWING YEAR BUT ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 6 WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR' AS SUCH, EVEN ON THE PRINCIPLE OF CONSISTENCY THE DEDUCTION HAS TO BE ALLOWED TO THE APPELLANT AND IS ACCORDINGLY ALLOWED. AS REGARDS THE ALLOWANCE OF INTEREST OF RS.430,7 51/ - THE AO HAS CONSIDERED THE S AME AS HAVING BEEN PAID TO BPT AS INTEREST ON ARREARS, ETC. HOWEVER, THE APPELLANT HAS STATED THAT THE SAME WAS IN RESPECT OF LOANS TAKEN FOR PAYMENTS MADE TO 8FF. ACCORDING TO THE APPELLANT THE SAME IS IN THE NATURE OF INTE REST PAID ON CAPITAL BORROWED FOR THE PURPOSE OF RENEWAL OF TENANCY WITH DPI AND AS SUCH IS ALLOWABLE AS A DEDUCTION U/S 24. HOWEVER, NO SPECIFIC ARGUMENTS ARE RAISED IN THIS REGARD. THEREFORE, THE AO IS DIRECTED TO VERIFY THE SAID CLAIM OF INTEREST AND DE CIDE THE ALLOWABILITY OF THE SAME U/S 24 OF THE ACT IN ACCORDANCE WITH LAW. AS SUCH THIS GROUND NO. 2.2(II) IS ALLOWED FOR STATISTICAL PURPOSES. SINCE THE SUBSTANTIAL GROUNDS HAVE BEEN DECIDED BY ME ON MERITS, GROUND NO. 2.3 WHICH IS A WITHOUT PREJUDICE GR OUND PERTAINING TO CORRECT COMPUTATION OF INCOME FROM HOUSE PROPERTY IS NOT ADJUDICATED. 5 . ON APPRAI SAL OF THE ABOVE MENTIONED FINDING , THE FACTUAL POSITION IS NOT IN DISPUTE . T HE ASSESSEE IS THE OWNER OF THE PROPERTY IN Q UESTION AND THE RENT RECEIVED BY ASSESSEE WAS TREATED AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS ALSO PAID THE GROUND RENT CHARGES TO THE BPT DUE TO RELEVANT PREVIOUS YEAR AS WELL AS EARLIER YEAR ALSO. THE SAID AMOUNT WAS PAID IN PURSUANCE OF THE ORDER PASSED BY HONBLE SUPREME C O URT. THE QUESTION ARISES WHETHER THE SAME IS ALLOWABLE AS A DEDUCTION AGAINST THE INCOME FROM HOUSE PROPERTY. IT IS SPECIFICALLY HELD THAT THE PAYMENT MADE TO THE DPT IS NOTHING TO AKIN TO THE SERVICE TAX LEVIED BY A LOCAL AUTHORITY. THE CIT(A) HAS CONSI DERED THE DECISION OF THE SUPREME COURT IN THE CASE OF THE ASSESSEE AND AS WELL AS THE CASE OF M/S DWARKADAS MARFATIA AND SONS VS. BOARD OF TRUSTEES OF THE PORT OF BOMBAY (1989) ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 7 3 SCC 293 IN WHICH IT IS SPECIFICALLY HELD THAT THE GROUND RENT PAID TO THE BP T IN THE NATURE OF SERVICE TAX LEVIED BY LOCAL AUTHORITY AND THEREFORE ELIGIBLE FOR DEDUCTION U/S 23 R.W.S. 27(VI) OF THE ACT. MOREOVER, THE ISSUE HAS BEEN DEALT BY THE REVENUE FOR PREVIOUS YEAR ALSO RELEVANT TO THE A.Y. 2010 - 11. T HE CLAIM OF THE ASSESSEE WAS ALLOWED SPECIFICALLY IN THE CIRCUMST ANCES WHEN THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT. THE CIT(A) HAS EXAMINED NUMBER OF ASPECTS OF THE CASES AND BY GOING THROUGH ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DE CIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, ALL THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. REASONS FOR DELAY IN PRONOUNCEMENT OF ORDER 6.1 BEFORE PARTING, WE WOULD LIKE TO ENUMERATE THE CIRCUMSTANCES WHICH HAVE LED TO DELAY IN PRONOUNCEMENT OF THIS ORDER. THE HEARING OF THE MATTER WAS CONCLUDED ON 07/02/2020 AND IN TERMS OF RULE 34(5) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE MATTER WAS REQUIRED TO BE PRONOUNCED WITHIN A TOTAL PERIOD OF 90 DAYS. AS PER SUB - CLAUSE (C) OF RULE 34(5), EVERY ENDEAVOR WAS TO BE MADE TO PRONOUNCE THE ORDER WITHIN 60 DAYS AFTER CONCLUSION OF HEARING. HOWEVER, WHERE IT IS NOT PRACTICABLE TO DO SO ON TH E GROUND OF EXCEPTIONAL AND EXTRAORDINARY CIRCUMSTANCES, THE BENCH COULD FIX A FUTURE DATE OF PRONOUNCEMENT OF THE ORDER WHICH SHALL NOT ORDINARILY BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS. THUS, A PERIOD OF 60 DAYS HAS BEEN PROVIDED UNDER THE EXTANT RU LE FOR PRONOUNCEMENT OF THE ORDER. THIS PERIOD COULD BE EXTENDED BY THE BENCH ON THE GROUND OF EXCEPTIONAL AND ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 8 EXTRAORDINARY CIRCUMSTANCES. HOWEVER, THE EXTENDED PERIOD SHALL NOT ORDINARILY EXCEED A PERIOD OF 30 DAYS. 6.2 ALTHOUGH THE ORDER WAS WELL DRAFT ED AS WELL AS APPROVED BEFORE THE EXPIRY OF 90 DAYS, HOWEVER, UNFORTUNATELY, ON 24/03/2020, A NATIONWIDE LOCKDOWN WAS IMPOSED BY THE GOVERNMENT OF INDIA IN VIEW OF ADVERSE CIRCUMSTANCES CREATED BY PANDEMIC COVID - 19 IN THE COUNTRY. THE LOCKDOWN WAS EXTENDED FROM TIME TO TIME WHICH CRIPPLED THE FUNCTIONING OF MOST OF THE GOVERNMENT DEPARTMENTS INCLUDING INCOME TAX APPELLATE TRIBUNAL (ITAT). THE SITUATION LED TO UNPRECEDENTED DISRUPTION OF JUDICIAL WORK ALL OVER THE COUNTRY AND THE ORDER COULD NOT BE PRONOUNCE D DESPITE LAPSE OF CONSIDERABLE PERIOD OF TIME. THE SITUATION CREATED BY PANDEMIC COVID - 19 COULD BE TERMED AS UNPRECEDENTED AND BEYOND THE CONTROL OF ANY HUMAN BEING. THE SITUATION, THUS CREATED BY THIS PANDEMIC, COULD NEVER BE TERMED AS ORDINARY CIRCUMSTA NCES AND WOULD WARRANT EXCLUSION OF LOCKDOWN PERIOD FOR THE PURPOSE OF AFORESAID RULE GOVERNING THE PRONOUNCEMENT OF THE ORDER. ACCORDINGLY, THE ORDER IS BEING PRONOUNCED NOW AFTER THE RE - OPENING OF THE OFFICES. 6.3 FACED WITH SIMILAR FACTS AND CIRCUMSTAN CES, THE CO - ORDINATE BENCH OF THIS TRIBUNAL COMPRISING - OFF OF HONBLE PRESIDENT AND HONBLE VICE PRESIDENT, IN ITS RECENT DECISION TITLED AS DCIT V/S JSW LIMITED (ITA NOS. 6264 & 6103/MUM/2018) ORDER DATED 14/05/2020 HELD AS UNDER: - 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUST DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE APPEALS WAS CONCLUDED ON 7TH JANUARY 2020, THIS ORDER THEREON IS BEING PRONOUNCED TODAY ON 14TH DAY OF MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 9 INCOME TAX APPELLATE TRIBUNAL RULES 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5)THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWING MANNERS: (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FOR PRONOUNCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTION AL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPEAL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT TO NOTE THAT THE EXPRESSION ORDINA RILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTE D THAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLATE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY ALL THE BENCHES OF THE TRIBUNAL. IN THE MEANW HILE (EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCOME - TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT . IN THE RULE D SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRESSION ORDINARILY HAS BEEN INSERTED IN ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 10 THE REQUIREMENT TO PRONOUNCE THE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITAT ED BY ANY EXTRAORDINARY CIRCUMSTANCES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SITUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE S PREAD OF COVID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUNT OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, T HERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATI ON HAS EXPIRED AFTER 15.03.2020 THEN THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN. HONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME - BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY , AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JUNE 2020. IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD BE CONSIDERED A CASE OF NATUR AL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAYBE INVOKED, ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 11 WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR C ONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID - 19 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, TH E PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITH IN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDINGAT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE I NTERPRETATION SO ASSIGNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCT IONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIMEBOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHA LL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY. THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH TH E NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS S ET OUT IN RULE 34(5) OF THE ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 12 APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90 - DAY TIME - LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE ANY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS CONCLUDED AND THE POINT OF TIME W HEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CASE. DRIVING STRENGTH FROM THE RATIO OF AFORESAID DECISION, WE EXCLUDE THE PERIOD OF LOCKDOWN WHILE COMPUTIN G THE LIMITATION PROVIDED UNDER RULE 34(5) AND PROCEED WITH PRONOUNCEMENT OF THE ORDER. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 25 / 08 / 2020 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 25 / 08 / 2020 V IJAY PAL SINGH /SR.PS ITA NO. 4382 /M/201 7 A.Y.20 12 - 13 13 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELL ANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI