PRINCIPAL COMMISSIONER OF INCOME TAX-3, KOLKATA V. SICPA INDIA LTD.

ITAT/36/2017

AI Insights

The case involves an appeal by the Principal Commissioner of Income Tax-3, Kolkata against SICPA India Ltd., concerning an order by the Income Tax Appellate Tribunal, Kolkata. The appeal was based on the reassessment order under Sections 147/143(3) of the Income Tax Act, 1961, which was challenged for the assessment year 2002-03. The revenue contested the Tribunal's decision which had deleted a disallowance of Rs.45,17,787 and quashed the finding that 25% of the royalty payment was capital in nature, referencing the Supreme Court's decision in Southern Switch Gear Ltd. vs. CIT. However, the appeal was not pursued due to the low tax effect, as per the CBDT guidelines.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 742943 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 10-12-2021
• Assessment Year: misc
• Other Referred Cases: Southern Switch Gear Ltd. vs. CIT and Another, reported in 232 ITR 359 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SOMAK BASU
• Assessee Lawyers: TILAK MITRA; RADHAMOHAN ROY
• Keywords: Capital nature; Income Tax; Low tax effect; Reassessment order; Royalty Payment
• Section: 147; 143(3); 260A

Judgement Text

"OD-2 ORDER SHEET IN THE HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE IA NO:GA/2/2017 (OLD NO: GA/314/2017) In ITAT/36/2017 PRINCIPAL COMMISSIONER OF INCOME TAX-3, KOLKATA Vs. SICPA INDIA LTD. BEFORE: The Hon'ble JUSTICE T. S. SIVAGNANAM AND The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : December 10, 2021. [Via Video Conference] Appearance: Mr. Tilak Mitra, Adv. Mr. Radhamohan Roy, Adv. … for the appellant/Revenue Mr. Somak Basu, Adv. … for the respondent/assessee The Court : This appeal by the revenue filed under Section 260A of the Income Tax Act, 1961 (the Act) is directed against an order dated 9th March, 2016 passed by the Income Tax Appellate Tribunal “B” Bench, Kolkata, in I.T.A. No. 36/Kol/2012 for the assessment year 2002-03 and C.O. No.05/Kol/2012 in I.T.A. No. 36/Kol/2012 for the assessment year 2002-03. The revenue has raised the following substantial questions of law for consideration :- (i) Whether on the facts and circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law by treating 2 the reassessment order passed under Sections 147/143(3) of the Income Tax Act, 1961 as bad in law in the case of the assessee for the Assessment Year 2002-2003 in deleting the disallowance of Rs.45,17,787/- ? (ii) Whether on the facts and circumstances of the case the Learned Income Tax Appellate Tribunal was justified in law by quashing the finding of the Assessing Officer that 25% of the Royalty payment was capital in nature in view of the decision of the Hon’ble Supreme Court in the case of Southern Switch Gear Ltd. vs. CIT and Another, reported in 232 ITR 359 (SC) ? We have heard Mr. Tilak Mitra, learned Standing Counsel for the appellant/revenue and Mr. Somak Basu, learned Counsel appearing for the respondent/assessee. The learned Counsel for the respondent/assessee even on the earlier occasion pointed out that the appeal could not be pursued by the revenue on the ground of low tax effect. The matter was adjourned to enable the appellant/department to examine the said submission. Today when the matter is taken up for hearing the learned Standing Counsel for the revenue has drawn our attention to the computation done by the Assessing Officer in his order of assessment dated 27th December, 2009 and it is submitted that tax effect in this appeal is Rs.20,10,147/-. If that is the factual position, then the appeal cannot be pursued with by the revenue on the ground of low tax effect. In the light of the said submission, the appeal stands disposed of on the ground of low tax effect. 3 In the event, the revenue is of the opinion that still the appeal is to be pursued as it may come under any one of the exclusion clauses in the circular issued by the CBDT, we, however, grant liberty to the revenue to file an application for restoration of this appeal, if the appeal is not hit by CBDT circular of low tax effect. Consequently, the substantial questions of law are left open. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) GH/sp3 "