SUPERTEX INDUSTRIES LTD, MUMBAI V. DY-CIT CIR 4(3)(2), MUMBAI

MA 433/MUM/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7398 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-05-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-02-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 12-06-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DHARAN GANDHI AW
• Keywords: Set aside
• Section: 32; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI SANDEEP SINGH KARHAIL, JM MA No. 433/Mum/2023 Arising out of ITA 4699/Mum/2018 (Assessment Year 2012-13) Superte x Indus tr ies Ltd Balk rishna K rupa, 2 nd F loor , 45-49 Ba bu Genu Rd, Prin cess St reet, Ka lade vi, Mum bai-400 002 Vs. Dy.CIT CIR-4(3)(2) Room No.649, 6 th Floor, Aaykar Bhavan, M.K. road, Mumbai-400 020 (Applicant) (Respondent) PAN No. AAACS7274D Assessee by : Shri Dharan Gandhi a/w Shri Vishal Shah, ARs Revenue by : Ms. Mahita Nair, DR Date of hearing: 09-02-2024 Date of pronouncement : 03.05.2024 O R D E R PER PRASHANT MAHARISHI, AM: 01. This Miscellaneous Application is filed by the assessee in ITA No. 4699/Mum/2018 for A.Y. 2012-13 dated 20 th September, 2022, wherein the miscellaneous application says that the following error are the mistake apparent from the record:- “1. The finding of the Hon'ble Tribunal is given in Para 7. From the said finding the following can be seen: a. The Ld. Tribunal has, stated that neither there is a provision under the Income-tax Act, nor under the Page | 2 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 Sick Industrial Companies Act in this regard. The Tribunal has failed to consider the provisions of section 32(1) of SICA. Section 32 of the SICA is reproduced hereunder: "32. Effect of the Act on other laws.- (1)The provisions of this Act and of any rules or schemes made there under shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act. (2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of section 72A of the Income-tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company. In light of the above, it is submitted that, the scheme approved is binding on the Tax Department. An appeal filed against the same has been rejected. Therefore, as per section 32 of the SICA, provisions Page | 3 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 of such scheme shall apply notwithstanding anything contained in the Income-tax Act. One of the reliefs claimed was exemption from application of section 115JB of the Act. Thus, the said exemption has to be granted to the Petitioner, and therefore, the order of the Ld. Tribunal contains a mistake apparent from record. Non-consideration of the provisions of the Statute, constitutes a mistake apparent from record. b. Tribunal has failed to consider the binding judgment in the case of DGIT (Adm) & Anr vs. BIFR dated 23.03.2011 in case of the Hon'ble Delhi High Court. There is not a single word about the judgment of the Hon'ble Delhi High Court in the entire order. In the said order, in writ petitions filed by the Income-tax Department, the Hon'ble Court has held that each and every party which made concession at the stage, would abide by the same, even after the company has ceased to be sick. Such judgment has held that no party can go contrary to the scheme otherwise the order will loose its sanctity. By this means, even the other parties etc. would stop following the order. This cannot be permitted. The provisions of SICA has overriding effect over other laws to give effect to the rehabilitation proceedings. Non-consideration of the binding judgment of the Hon'ble Delhi High Court which was cited amounts to mistake apparent from record as held by the Hon'ble Apex Court in case of Honda Siel Power. Page | 4 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 c. The Hon'ble Tribunal has referred to the order dated 16.06.2010, wherein the BIFR had directed all the concerned to implement the un-implemented portion of the scheme. Accordingly, the Tax Department was directed to grant the Appellant the reliefs claimed for. Further, the Hon'ble Tribunal has failed to take into consideration the fact that the said order was challenged before the AAIFR by the Tax Department and the said appeal was rejected by the AAIFR vide order dated 30.09.2011. Thus, the scheme is binding on the Tax Department. Accordingly, it is submitted that the Appellant is entitled to relief claimed including exemption from application of section 115JB of the Act. This factum of dismissal of appeal of the Tax Department against the order dated 16.06.2010 has not been considered by the Hon'ble Tribunal read with the judgment of the Hon'ble Delhi High Court and the provisions of section 32 of the SICA. This amounts to mistake apparent from record. 2. The Hon'ble Tribunal had erred in not considering the departments' circular which states that the rehabilitation scheme would override the provisions of the Income-tax Act Department's circular in this context. In this regard, even the Department, has issued circular and clarified the position. The following is submitted in this regard: a. Circular: No. 523, dated 5-10-1988. Page | 5 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 "(3)Consequently, if the BIFR sanctions a scheme under section 17(3) of the Act specifically excluding or limiting the application of sections 41(1), 79 and 115J or of any one or more of these sections of the Income-tax Act, 1961 in respect of assessment years which are also specified, then the Assessing Officer will have to take due cognizance of this order and give effect to the same. Such a situation may arise in the case of a sick industrial company which has debited its account in respect of its interest liability in a particular assessment year. Subsequently, if in a scheme sanctioned by the BIFR, banks are directed to either waive or reduce the interest liability, this remission will become chargeable to tax under section 41(1) of the Income-tax Act in the year of reduction or waiver by the banks. It is possible that for speedier rehabilitation, the BIFR in its scheme provides that section 41(1) would not apply in the case of the sick company. The Assessing Officer, in these circumstances, will not subject to tax the remission or cessation of interest liability under section 41(1). b. Circular: No. 576, dated 31-8-1990. In the above circular, the Board, has reiterated the sentiments of the Circular: No. 523, dated 5-10- 1988. "3. The Board had withdrawn with immediate effect the above Circular Nos. 523 and 576 vide its letter of even numbers dated 30-12-1993. The said letter to Page | 6 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 AAIFR and BIFR clarified that each case of fiscal concession of 'financial assistance' under Direct Tax Laws will now be considered in each individual case on merits for the purpose of consent as contemplated in section 19(2) of SICA, 1985 and consent or denial of consent will be conveyed to BIFR by the Central Government. The modal agency for coordination between the Board for Industrial and Financial Reconstruction (BIFR) and, Central Board of Direct Taxes and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and Central Board of Direct Taxes will be the Director General of Income- tax (Admn.), 7th Floor, Mayur Bhawan, New Delhi- 110 001. Cases already decided in accordance with the Circular Nos. 523 and 576 were however, not required to be reopened." Thus, from the above, it can be seen that the case of fiscal concession of 'financial assistance' under Direct Tax Laws will now be considered in each individual case on merits for the purpose of consent as contemplated in section 19(2) of SICA, 1985 and consent or denial of consent will be conveyed to BIFR by the Central Government. Even as per the said Circular, on a case to case basis the concessions have to be conveyed to BIFR and the ultimate decision is binding on the Tax Department. Thus, clearly, even the Tax Department accepted the fact that the concessions would be seen from case to case basis. It is also agreed by the Department, that by virtue of section 32(1), the rehabilitation scheme Page | 7 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 would override the provisions of the Income-tax Act. In the present case, though the Department did not want to give any relief, however, the same was granted by BIFR. An appeal was filed by the Department against the order of BIFR with AAIFR, which also was dismissed. The said order has been accepted by the Tax Department. Thus, as per section 32(1) of SICA read with the Circulars, the reliefs granted to the Appellant, inter alia, including exemption from section 115JB of the Act is binding on the Tax Department and no contrary treatment can be given by the Tax Department, having accepted the order of AAIFR. Thus, the order of the Respondent, Ld. CIT(A) and the Ld. Tribunal is bad in law and liable to be set aside. 3. The said order of the Tribunal was not served upon the Appellant. A letter was filed on 08 December 2022 to get the copy of the order of the Tribunal which was received on 19.12.2022. As a result, the present application is within the prescribed time limit. 4. Our counsel Mr. Vishal Shah, CA has also signed this application in support of what has been stated herein and what had actually transpired in this matter. 5. The Assessee craves leave to refer to and rely upon the documents and material.” 02. The parties were heard. Page | 8 MA No. 433/Mum/2023 Supertex Industries Limited; A.Y. 12-13 03. On careful perusal of the order it was found that the co- ordinate Bench has not considered the decision of Hon'ble High Court dated 23 rd March, 2011, wherein the writ petition filed by the Revenue was dismissed. That decision of the Hon'ble High Court was not also referred to in the order of the learned CIT (A). Therefore, non-consideration of such error is a mistake in the order of the co-ordinate Bench. 04. Therefore, Miscellaneous Application filed by the assessee to that extent is allowed and the order is recalled to consider the same. Order pronounced in the open court on 03.05. 2024. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated:03.05. 2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai