The ACIT, Circle-1(3), Ahmedabad V. C. D. Integrated Services Ltd., Ahmedabad

MA 148/AHD/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5306 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Tax effect

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER MISC. APPLICATION NO.148/AHD/2016 IN ./ ITA NO.2863/AHD/2010 / ASSTT. YEAR: 2006-2007 ACIT, CIR.3 AHMEDABAD. VS. CD INTEGRATED SERVICES LTD. PREMIUM HOUSE, NR.GANDHIGRAM RLY. STATION ASHRAM ROAD AHMEDABAD. PAN : AABCC 2483 R / (APPLICANT) / (RESPONDENT) APPLICANT BY : SHRI PRASOON KABRA, SR.DR REVENUE BY : SHRI A.C. SHAH, AR ! / DATE OF HEARING : 17/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 28/03/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THIS MA OF THE REVENUE SEEKS RECALL OF ORDER OF THE TRIBUNAL QUA THE PRESENT ASSESSEE PASSED IN GROUP OF APPEALS IN ITA NO.2323/AHD/2015 AND 220 OTHERS DATED 16.12.20125 2. IN THE PRESENT MISC. APPLICATION, IT IS PLEADED BY THE REVENUE THAT IF SURCHARGE IS BEING CONSIDERED AS PART OF THE TAX , THEN TAX EFFECT BY VIRTUE OF RELIEF GIVEN BY THE CIT(A) WOULD COME TO RS.10,77,120/- WHICH MA NO. 148/AHD/2016 2 IS MORE THAN RS.10 LAKHS, AND THEREFORE ORDER OF T HE TRIBUNAL DISMISSING THE APPEAL OF THE REVENUE BEING NOT MAIN TAINABLE ON ACCOUNT OF LOW TAX EFFECTIVE INVOLVED IN IT DESERVE S TO BE RECALLED. 3. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE WAS UNABLE TO CONTROVERT THE SUBMISSION OF THE DEPARTMENT. HE BR OUGHT TO OUR NOTICE THAT THE TRIBUNAL HAS CONSIDERED A SIMILAR ISSUE IN MA NO.89/AHD/2016 IN ITA NO.2314/AHD/2015 WHEREIN THE TRIBUNAL PUT RE LIANCE UPON THE DECISION OF CHENNAI BENCH OF THE TRIBUNAL IN THE CA SE OF ACIT VS. SHRI R. VISWANATHAN WHERE TRIBUNAL HAS OBSERVED THAT SURCHA RGE SHOULD NOT BE CONSIDERED AS PART OF TAX FOR THE PURPOSE OF CALCUL ATING LIMIT OF RS.10 LAKHS FOR FILING APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD.CIT(A). HE PLACED ON RECORD COPY OF THIS ORDER. HOWEVER, HE BROUGHT TO OUR NOTICE JUDGMENT OF THE HONBLE SUPRE ME COURT IN THE CASE OF CIT VS. K. SRINIVASAN, 83 ITR 346 WHEREIN H ONBLE SUPREME COURT HAS HELD THAT SURCHARGE IS TO BE TREATED AS P ART OF INCOME-TAX, AND ACCORDING TO HIM, THE TRIBUNAL TOOK INCORRECT V IEW IN MA NO.89/AHD/2016. 4. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD AND JUDGMENT CITED BY THE LD.COUNSEL FOR THE ASSESSEE. IN VIEW OF HONBLE SUPREME COURT DECISION BROUGHT TO OUR NO TICE, IT IS APPARENT THAT VIEW TAKEN IN MA NO.89/AHD/2016 IN THE CASE OF ITO VS. SAROJBEN G. SHAH & OTHERS WAS NOT CORRECT VIEW. THE HONBL E SUPREME COURT HAS FORMULATED THE FOLLOWING QUESTION : 'WHETHER THE WORDS 'INCOME TAX' IN THE FINANCE ACT OF 1964 IN SUB-S. (2) (A) AND SUB-S. (2) (B) OF S. 2 WOULD INC LUDE SURCHARGE AND ADDITIONAL SURCHARGE'. THE HIGH COURT ANSWERED THE QUESTION IN THE NEGATIV E AND IN, FAVOUR OF THE ASSESSEE . MA NO. 148/AHD/2016 3 5. IT IS PERTINENT TO TAKE NOTE THE RELEVANT PART O F THE DISCUSSION MADE BY THE HONBLE COURT, WHICH READS AS UNDER: .THE MEANING OF THE WORD 'SURCHARGE' AS GIVEN IN THE WEBSTER'S NEW INTERNATIONAL DICTIONARY INCLUDES AMONG OTHERS 'TO CHARGE (ONE) TOO MUCH OR IN ADDITION. . . . . .' ALSO 'ADD ITIONAL TAX'. THUS THE MEANING OF SURCHARGE IS TO CHARGE IN ADDITION O R TO SUBJECT TO AN ADDITIONAL OR EXTRA CHARGE. IF THAT MEANING IS A PPLIED TO S. 2 OF THE FINANCE ACT 1963 IT WOULD LEAD TO THE RESULT TH AT INCOME TAX AND SUPER TAX WERE TO BE CHARGED IN FOUR DIFFERENT WAYS OR AT FOUR DIFFERENT RATES WHICH MAY BE DESCRIBED AS (I) THE B ASIC CHARGE OR RATE (IN PART I OF THE FIRST SCHEDULE); (II) SURCHA RGE; (III) SPECIAL SURCHARGE AND (IV) ADDITIONAL SURCHARGE CALCULATED IN THE MANNER PROVIDED IN THE SCHEDULE. READ IN THIS WAY THE ADDI TIONAL CHARGES FORM A PART OF THE INCOME TAX AND SUPER TAX. IT IS POSSIBLE TO ARGUE AND THAT ARGUMENT HAS BEEN COMMENDED ON BEHAL F OF THE REVENUE THAT THE WORD 'SURCHARGE'' HAS BEEN USED IN ART. 271 FOR THE PURPOSE OF SEPARATING IT FROM THE BASIC CHARGE OF A TAX OR DUTY FOR THE PURPOSE OF DISTRIBUTING THE PROCEEDS OF THE SAME BETWEEN THE UNION AND THE STATES. THE PROCEEDS OF THE SURCH ARGE ARE EXCLUSIVELY ASSIGNED TO THE UNION. EVEN IN THE FINA NCE ACT ITSELF IT IS EXPRESSLY STATED THAT THE SURCHARGE IS MEANT FOR THE PURPOSE OF THE UNION. IT WOULD APPEAR THAT SINCE THE FINANCE ACT 1943 UPT O THE FINANCE ACT 1967 A PROVISION WAS MADE FOR TAXING THE INCOME UNDER THE HEAD 'SALARIES' 'ACCORDING TO THE PROVISIONS OF THE FINANCE ACT OF THE PRECEDING YEAR RATHER THAN OF THE CURRENT YEAR IF THE ASSESSEE HAD ANY INCOME IN ADDITION TO HIS INCOME BY WAY OF SALARY. ACCORDING TO THE TRIBUNAL THIS WAS DONE BECAUSE IF THE INCOME UNDER THE 'SALARIES' WAS TO BE ASSESSED AT THE RATE S FIXED BY THE FINANCE ACT ENACTED FOR THE CURRENT YEAR IT WOU LD ENTAIL CONSIDERABLE ADMINISTRATIVE WORK IN THE FORM OF REF UND OR COLLECTION IN THE FINAL ASSESSMENT. SINCE BY THE FI NANCE ACT OF 1967 THIS METHOD OR PROCEDURE WAS DROPPED WE DO NOT CONSIDER THAT MUCH SIGNIFICANCE CAN BE ATTACHED TO THIS ASPE CT. IN THE RESULT WE ARE UNABLE TO SUSTAIN THE VIEW OF THE HIGH COURT. THE QUESTION THAT WAS REFERRED MUST BE ANSWE RED IN THE AFFIRMATIVE AND IN FAVOUR OF THE REVENUE. IN VIEW O F THE NATURE OF THE POINT INVOLVED THE PARTIES ARE LEFT TO BEAR THE IR OWN COSTS IN THIS COURT. THE APPEAL BY CERTIFICATE IS DISMISSED. MA NO. 148/AHD/2016 4 6. RESPECTFULLY FOLLOWING THE DECISION OF THE HONB LE SUPREME COURT, WE ARE VIEW THAT FOR THE PURPOSE OF CALCULATING TAX EFFECT, COMPONENTS OF SURCHARGE IS ALSO TO BE TAKEN INTO CONSIDERATION IN ORDER TO FIND WHETHER TAX EFFECT BY VIRTUE RELIEF GIVEN BY THE LD .COMMISSIONER IS WITHIN THE THRESHOLD LIMIT OF RS.10 LAKHS STIPULATE D BY THE CBDT IN ITS CIRCULAR NO.21 OF 2015. IN VIEW OF THE ABOVE, MA O F THE REVENUE IS ALLOWED. APPEAL IS RESTORED TO ITS ORIGINAL NUMBER AND REGISTRY IS DIRECTED TO LIST THE APPEAL FOR HEARING ON 3 RD APRIL, 2017. PARTIES BE INFORMED ACCORDINGLY. 7. IN THE RESULT, MA OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 28 TH MARCH, 2017. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD DATED 28/03/2017