Menkins Agro Products P. Ltd., Hyderabad V. ITO, Ward-16(1), Hyderabad

MA 123/HYD/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0570 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-07-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 08-06-2012
• Court: TRIBUNAL
• Department Lawyers: GANGADHAR
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER M.A. NO. 123/HYD/12 (IN ITA NO. 1687/HYD/2010 ASSESSMENT YEAR : 2006-07) MEKINS AGRO PRODUCT(P) LTD., APPLICANT HYDERABAD. (PAN AAACM 9471G) VS. INCOME-TAX OFFICER, RESPONDENT WARD 16(1), HYDERABAD. APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI GANGADHAR PANDA DATE OF HEARING : 31/05/2013 DATE OF PRONOUNCEMENT : 04/07/ 2013 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSE E ARISES OUT OF THE ORDER OF ITAT A BENCH, HYDERABAD BENCH ES, HYDERABAD, IN APPEAL ITA NO. 123/HYD/2012 FOR THE A SSESSMENT YEAR 2006-07, DATED 07/05/2012. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE HAD RET URNED PROFITS ARISING FROM DEVELOPMENT OF PROPERTIES AS B USINESS PROFITS. THE A.O. TREATED THE SAME AS CAPITAL GAINS. BEFORE THE CIT(A) AND BEFORE US, IT WAS ARGUED THAT CAPITAL GAINS UNDER D EVELOPMENT AGREEMENTS AROSE WHEN THEY WERE ENTERED INTO IN THE EARLIER YEARS. HENCE, THE CAPITAL GAINS DID NOT ARISE IN TH E YEAR UNDER APPEAL. WE HAVE HELD THAT THE ADDITION MADE BY THE A.O. ON THE M.A. NO. 123/H/12 MEKINS AGRO PRODUCT (P) LTD. 2 BASIS OF DEVELOPMENT AGREEMENTS DID NOT ACCRUE IN T HIS YEAR AS NO TRANSFER HAD TAKEN PLACE DURING THE YEAR. IT IS TO BE UNDERSTOOD THAT THE ASSESSEE HIMSELF HAD OFFERED A CERTAIN PORTION OF THE GAINS AS BUSINESS PROFITS FOR THE YE AR UNDER APPEAL AND WHICH HAS BEEN TREATED AS CAPITAL GAINS. THIS A MOUNT WAS NOT ON APPEAL AND IT IS ONLY IN RESPECT OF THE ADDITION S, THE GROUNDS RAISED BY THE ASSESSEE THAT THEY DID NOT ACCRUE WAS CONSIDERED AND ACCEPTED. THE ADDITIONS MADE BY THE ASSESSING O FFICER WAS DELETED ON THE GROUND THAT SUCH GAINS DID NOT ACCRU E DURING THE YEAR UNDER APPEAL. 3. IN THIS M.A. THE PETITIONER SUBMITTED THAT IT DI D NOT ADMIT ANY INCOME UNDER THE HEAD CAPITAL GAIN IN THE RET URN OF INCOME IT IS SUBMITTED THAT THE PETITIONER OFFERED THE INC OME UNDER THE HEAD BUSINESS AND THE ASSESSING OFFICER ASSESSED THE SAME UNDER THE HEAD CAPITAL GAIN. HE POINTED OUT THAT WHEN THE ASSESSING OFFICER CHANGED THE HEAD OF INCOME, ALL C ONSEQUENCES OF COMPUTATION OF TOTAL INCOME UNDER THE SAID SHOUL D FOLLOW. FURTHER, THE DEPARTMENT ALSO DID NOT FILE ANY APPEA L OR PASSED ANY REVISION ORDER AGAINST THE COMPUTATION OF INCOM E UNDER THE HEAD CAPITAL GAIN. IT WAS SUBMITTED THAT THE DECISI ON OF THE ASSESSING OFFICER HOLDING THAT THE SAID INCOME IS A SSESSABLE UNDER THE HEAD CAPITAL GAIN BECAME FINAL AND, THEREFORE , THERE IS NO QUESTION OF TAXING THE AMOUNT SHOWN IN THE RETURN O F INCOME WHEN THE SAME IS TO BE TAXED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT RELEVANT FOR COMPUTATION OF INCOME UNDER TH E HEAD CAPITAL GAIN. THE PETITIONER, THEREFORE, REQUESTE D THE HONBLE ITAT TO PASS APPROPRIATE ORDERS U/S 254(2) OF THE A CT. 4. WE HAVE HEAD BOTH THE PARTIES AND PERUSED THE RE CORD. THE TRIBUNAL WAS NOT CONSIDERING THE YEAR IN WHICH CAPI TAL GAINS ACTUALLY ACCRUED. IN SO FAR AS ADDITION MADE BY THE A.O. TO THE M.A. NO. 123/H/12 MEKINS AGRO PRODUCT (P) LTD. 3 CAPITAL GAINS, THE TRIBUNAL CAME TO THE CONCLUSION THAT IT DID NOT ACCRUE DURING THE YEAR BECAUSE THERE WAS NO TRANSFE R OF ANY RIGHTS IN IMMOVABLE PROPERTY DURING THE YEAR AND HE NCE THE ADDITION WAS DELETED BY TRIBUNAL. THE QUESTION OF DELETING THE INCOME OFFERED BY THE ASSESSEE HIMSELF WAS NOT BEFO RE THE TRIBUNAL, SINCE THERE WAS NO SUCH TREATMENT GIVEN B Y THE ASSESSING OFFICER, AND HENCE NOT DECIDED BY THE TRI BUNAL. THUS, IT IS A CASE WHERE THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN DELETED BY THE TRIBUNAL. IN THE CONSEQUENTIAL PROCEEDINGS THAT THE ASSESSING OFFICER TAKES UP FOR GIVING EFFE CT TO THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER HAS TO STRICTLY ADHERE TO THE DIRECTIONS OF THE TRIBUNAL. 10. IT IS PERTINENT TO MENTION AT THIS JUNCTURE THAT THE INCOME-TAX AUTHORITIES ARE REQUIRED TO EXERCISE THEIR POWERS I N ACCORDANCE WITH LAW, AS PER THE POWER GIVEN TO THEM IN SPECIFIC SECTIONS . IF THE POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE EXERCISED B Y ANOTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WOULD CREATE CHAOS IN TH E ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WOULD MEAN NOTHING. JUDGMENT OF A HIGHER FORUM CANNOT BE SUBSTITUTED BY THE DECISIONS OF THE LOWER AUTHORITIES. JUDICIAL DISCIPLINE REQUIRES THAT THER E CANNOT BE ANY AMOUNT OF DISREGARD TO THE SUPERIOR AUTHORITY IN THE HIERARCH Y BY THE ASSESSING OFFICER. WHEN ONCE THE TRIBUNAL DECIDES AN ISSUE IN ONE WAY, THE ONLY COURSE AVAILABLE TO THE ASSESSING OFFICER IS TO FOL LOW THE ORDER OF THE TRIBUNAL IN TRUE SPIRITS, AND IT IS NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO TAKE A DIFFERENT VIEW, OR TO SIT IN JUDGMENT OVE R THE ORDER OF THE TRIBUNAL BY INTERPRETING THE SAME IN THE MANNER HE WANTED. THUS, THE ASSESSING OFFICER IS DUTY BOUND TO STRICTLY ADHERE TO THE DIRECTIONS OF THE TRIBUNAL WHILE RE-DECIDING THE ISSUES IN PURSUANCE OF THE ORDERS OF THE TRIBUNAL. AT THIS JUNCTURE, IT IS APT TO REFER TO T HE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF STATE OF A NDHRA PRADESH V/S. CTO AND ANOTHER (169 ITR 564), WHEREIN IT HAS BEEN HELD AS FOLLOWS- M.A. NO. 123/H/12 MEKINS AGRO PRODUCT (P) LTD. 4 THE TRIBUNALS FUNCTIONING WITHIN THE JURISDICTION O F A PARTICULAR HIGH COURT IN RESPECT OF WHOM THE HIGH COURT HAS THE POWER OF SUPERINTENDENCE UNDER ARTICLE 227 ARE BOUND TO FOLLOW TH E DECISIONS OF THE HIGH COURT UNLESS, ON AN APPEAL TO T HE SUPREME COURT, THE OPERATION OF THE JUDGMENT IS SUSPENDED. IT I S NOT PERMISSIBLE FOR THE AUTHORITIES AND THE TRIBUNALS TO I GNORE THE DECISIONS OF THE HIGH COURT OR TO REFUSE TO FOLLOW TH E DECISIONS OF THE HIGH COURT ON THE PRETEXT THAT AN APPEAL HAS BEE N FILED IN THE SUPREME COURT WHICH IS PENDING OR THAT STEPS ARE BEING TA KEN TO FILE AN APPEAL. IF ANY AUTHORITY OR THE TRIBUNAL REFUS ES TO FOLLOW ANY DECISION OF THE HIGH COURT ON THE ABOVE GROUNDS, IT WOULD BE CLEARLY GUILTY OF COMMITTING CONTEMPT OF THE HIGH COU RT AND IS LIABLE TO BE PROCEEDED AGAINST. 11. AT THIS JUNCTURE, IT IS ALSO PERTINENT TO MEN TION THE OBSERVATIONS OF THE HIGH COURT, BY PLACING RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF SUBRAMANIAN ITO V/ S SIEMENS INDIA LTD. (156 ITR 11), WHICH ARE AS FOLLOWS- REFERENCE MAY ALSO BE INVITED TO THE DECISION OF THE BOMBAY HIGH COURT IN SUBRAMANIAN, ITO V. SIEMENS INDIA LTD. [1985] 156 ITR 11. THE QUESTION THAT AROSE FOR CONSIDERATION IN TH IS CASE IS WHETHER THE INCOME-TAX OFFICER IS BOUND BY THE DECISIO N OF A SINGLE JUDGE OR A DIVISION BENCH OF THE COURT WITHIN WHOSE JURISDICTION HE IS OPERATING EVEN IF AN APPEAL HAS BEEN PREFERRED AGAINST SUCH DECISION AND IS PENDING. THE FOLLOWING OBSE RVATIONS OF THE BOMBAY HIGH COURT MAY BE EXTRACTED : 'SO FAR AS THE LEGAL POSITION IS CONCERNED, THE ITO WOULD BE BOUND BY A DECISION OF THE SUPREME COURT AS ALSO BY A DECISION OF THE HIGH COURT OF THE STATE WITHIN WHOSE JURISDICTION HE IS (FUNCTIONING), IRRESPECTIVE OF THE PENDENCY OF ANY APPEAL OR SPECIAL LEAVE APPLICATION AGAINST THA T JUDGMENT. HE WOULD EQUALLY BE BOUND BY A DECISION OF ANOTHER HIGH COURT ON THE POINT, BECAUSE NOT TO FOLLO W THAT DECISION WOULD BE TO CAUSE GRAVE PREJUDICE TO THE ASSESS EE. WHERE THERE IS A CONFLICT BETWEEN DIFFERENT HIGH COUR TS, HE MUST FOLLOW THE DECISION OF THE HIGH COURT WITHIN WH OSE JURISDICTION HE IS (FUNCTIONING), BUT IF THE CONFLICT IS BETWEEN DECISIONS OF OTHER HIGH COURTS, HE MUST TAKE THE VIE W WHICH IS IN FAVOUR OF THE ASSESSEE AND NOT AGAINST HIM. SIM ILARLY, IF THE INCOME-TAX APPELLATE TRIBUNAL HAS DECIDED A POINT I N FAVOUR OF THE ASSESSEE, HE CANNOT IGNORE THAT DECISIO N AND TAKE A CONTRARY VIEW, BECAUSE THAT WOULD EQUALLY PREJ UDICE THE ASSESSEE.' (EMPHASIS SUPPLIED) 12. IT IS, HOWEVER, PERTINENT TO EMPHASISE AND MEN TION HERE THAT HAVING DECIDED THE APPEAL OF THE ASSESSEE, VIZ. ITA NOS.1687/HYD/2010 M.A. NO. 123/H/12 MEKINS AGRO PRODUCT (P) LTD. 5 WITH ITS ORDER DATED 7.5.2012, THE TRIBUNAL IS CEAS ED OF ITS JURISDICTION OVER THAT APPEAL, EXCEPT TO THE LIMITED EXTENT OF R ECTIFYING ANY MISTAKE THEREIN IN TERMS OF PROVISIONS OF S.254(2) OF THE A CT. IN THE PRESENT ELABORATE MISCELLANEOUS APPLICATION, THE ASSESSEE H AS NOT POINTED OUT ANY MISTAKE IN THE ORDER OF THIS TRIBUNAL DATED 7.5.20 12, WHICH WARRANTS RECTIFICATION IN TERMS S.254(2) OF THE ACT. ALL TH AT THE ASSESSEE SPEAKS OF IS ABOUT THE GRIEVANCE THAT IT HAS SUFFERED ON ACCO UNT OF THE CONSEQUENTIAL ORDERS PASSED BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION, WHILE GIVING EFFECT TO THE ORDER OF THIS TRIBUNAL D ATED 7.5.2012. THAT CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER CONSTITUTES INDEPENDENT PROCEEDINGS, AND NOT PART OF THE PROCEE DINGS WHICH LED TO THE PASSING OF THE ORDER OF THE TRIBUNAL DATED 7.5. 2012 ON THE SECOND APPEAL OF THE ASSESSEE, AND IF THE ASSESSEE IS AGGR IEVED BY THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER , IT MAY GIVE RISE TO FIRST APPELLATE PROCEEDINGS BEFORE THE CIT(A) OR FU RTHER APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL. HOWEVER, THE GRIE VANCE OF THE ASSESSEE ON ACCOUNT OF ALLEGED MISTAKES IN THE CONSEQUENTIAL ORDER, EITHER ON ACCOUNT OF INTERPRETATIONAL DIFFERENCES OR EVEN ON ACCOUNT OF DISRESPECT/DISREGARD TO THE DIRECTIONS OF THE TRIBU NAL, SHALL NOT VEST ANY POWER OR JURISDICTION BACK WITH THE TRIBUNAL, TO OV ERSEE THE CORRECTNESS OF THE CORRECTNESS OF THE CONSEQUENTIAL ORDERS PASSED, MUCH LESS, TO GIVE DIRECTIONS TO REVISE OR RECTIFY THE SAME, EVEN IF T HERE IS ANY MISTAKE IN THE SAME. IF THE CONSEQUENTIAL ORDER PASSED BY THE AS SESSING OFFICER IS DE HORS THE DIRECTIONS OF THE TRIBUNAL, OR IF THERE IS ANY GRIEVANCE TO THE ASSESSEE ON ACCOUNT OF SUCH CONSEQUENTIAL ORDER, AS ALREADY NOTED ABOVE, THE REMEDY FOR THE ASSESSEE LIES ELSEWHERE, VIZ. IN THE FRESH PROCEEDINGS COMMENCING WITH SUCH CONSEQUENTIAL ORDER AND NOT IN THE PROCEEDINGS THAT CULMINATED WITH THE ORDER OF THIS TRIBUNAL DAT ED 7.5.2012. 13. IN THE ABSENCE OF ANY SPECIFIC MISTAKE WHICH W ARRANTS ANY RECTIFICATION WITHIN THE SCOPE OF THE PROVISIONS OF S.254(2) OF THE ACT, IN THE ORDER OF THE TRIBUNAL DATED 7.5.2012, WE DO NOT FIND REASON TO RECTIFY M.A. NO. 123/H/12 MEKINS AGRO PRODUCT (P) LTD. 6 OUR EARLIER ORDER AND ACCORDINGLY, THE MISCELLANEOU S APPLICATIONS OF THE ASSESSEE ARE DISPOSED OF, WITH THE OBSERVATIONS AS ABOVE. 14. IN THE RESULT, ALL THE THREE MISCELLANEOUS APP LICATIONS OF THE ASSESSEE ARE DISPOSED OF AS ABOVE. PRONOUNCED IN THE OPEN COURT ON 04 JULY, 2013. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 04 TH JULY, 2013. KV COPY TO:- 1) M/S MEKINS AGRO PRODUCTS (P) LTD., C/O S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS RESIDENCY, ROAD NO.9, HIMAYAT NAGAR, HYDERABAD 2) DCIT, RANGE 16(1), HYDERABAD 3) THE CIT (A)-V, HYDERABAD 4) THE CIT-IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD