SYNGENE INTERNATIONAL LTD V. THE PRINCIPAL COMMISSIONER OF INCOME TAX

ITA/781/2018

AI Insights

The case involves Syngene International Ltd appealing against the orders of the Income Tax Appellate Tribunal (ITAT) and the Commissioner of Income-Tax (CIT), which denied them the benefit under Section 10AA of the Income Tax Act for the Assessment Year 2012-13. The primary contention was whether the CIT was justified in revising the assessment order under Section 263, despite the issue being debatable and previously ruled in favor of the assessee for earlier years. The court examined the procedural validity of the CIT's actions and the substantive merits of the case, ultimately finding in favor of Syngene.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 752816 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 14-02-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: PERCY PARDIWALLA; TANMAYEE RAJKUMAR
• Keywords: Assessment year 2012-2013; Deduction under section 10AA; Income tax appeal; Jurisdiction; Revisional Order
• Section: 143(3); 263; 10AA; 260-A

Judgement Text

" - 1 - ITA No. 781 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF FEBRUARY, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR INCOME TAX APPEAL NO. 781 OF 2018 BETWEEN : SYNGENE INTERNATIONAL LTD PLOT NOS. 2 AND 3 BOMMASANDRA IV PHASE JIGANI LINK ROAD BENGALURU-560 099 PAN: AABCS9936M REPRESENTED HEREIN BY ITS DEPUTY GENERAL MANAGER – FINANCE MR. NAVNEET SINGAL …APPELLANT (BY SHRI. PERCY PARDIWALLA, SENIOR ADVOCATE FOR MS. TANMAYEE RAJKUMAR, ADVOCATE) AND : THE PRINCIPAL COMMISSIONER OF INCOME-TAX, BENGALURU-6 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU-560 095 …RESPONDENT (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) . . . . THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31.05.2018 PASSED IN ITA NO.906/BANG/2016, FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA - 2 - ITA No. 781 of 2018 PRONOUNCED BY THE TRIBUNAL ON 31.05.2018 DISMISSING THE APPELLANT'S APPEAL IN ITA NO.906/BANG/2016 (ANNEXURE 'G') AND ETC. THIS ITA, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the assessee directed against order dated 31.05.2018 in ITA No.906/Bang/2016 (Annexure-G) passed by the ITAT1, Bengaluru has been admitted to consider the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the revisional order passed by the respondent although the issue of allowability of the appellant’s claim for deduction under Section 10AA was debatable where two or more views are possible, and thus the assessment order could not have been the subject matter of revision under Section 263 of the Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal thus failed to appreciate that the order passed by the respondent under Section 263 of the Act revising the assessment order passed the Assessing Officer was wholly devoid of jurisdiction and otherwise bad in law and on facts? 2. Heard Shri. Percy Pardiwalla, learned Senior Advocate for the assessee and Shri. E.I. Sanmathi, learned Standing Counsel for the Revenue. 1 Income Tax Appellate Tribunal - 3 - ITA No. 781 of 2018 3. Briefly stated facts of the case are, Assessment order under Section 143(3) of the Income Tax Act, 19612 was completed for A.Y. 2012-13 on 23.03.2015. A notice under Section 263 of the IT Act was issued by the CIT3 stating inter alia that it was noticed from the records that the deduction under Section 10AA of the IT Act was disallowed in assessee’s own case for A.Ys. 2004-05 to 2009-10. Assessee submitted its reply inter alia stating thus: “As explained above, the Bangalore ITAT for the AY’s 2003-04 to AY 2009-10 has concluded in appellant’s own case that its activities results in manufacture or production of article or thing. The ITAT, vide its order November 23, 2015 (copy of order enclosed as Annexure 2) for the AY 2003-04, 2004-05 and 2007- 08 to AY 2009-10 has given due to relief to Syngene in relation to the above matter. The ITAT has held that Syngene is eligible to claim relief under Section 10B and 10AA of the Act.” 4. After receiving the above reply, CIT passed his order dated 29.03.2016 recording inter alia that deduction under Section 10AA of the Act was denied to the assessee for A.Ys. 2010-11 and 2011-12. Interestingly, he neither referred to his notice nor the reply submitted by the assessee. The specific case of the Revenue in the notice under Section 2 ‘the Act’ for short 3 Commissioner of Income-Tax - 4 - ITA No. 781 of 2018 263 of the IT Act was that assessee was denied the benefit for A.Ys. 2004-05 to 2009-10. When the matter was under consideration before Commissioner, ITAT had already given the benefit of Section 10AA of the Act to the assessee for A.Ys. 2004-05 to 2009-10 and the matter had stood concluded. On coming to know that the assessee had got the relief, to circumvent the reply, CIT has referred to A.Ys. 2010- 11 & 2011-12 and passed the order. Subsequently, Assessing Officer has passed his order dated 28.12.2016 giving effect to the order passed by the CIT. The ITAT has confirmed CIT’s order dated 29.03.2016. 5. Shri. Percy Pardiwalla, learned Senior Advocate submitted that:  the basis on which notice dated 09.03.2016 was issued by the Commissioner was not available when the reply was filed by the assessee. The premise on which the notice was issued was that benefit under Section 10AA of the Act was denied for A.Ys. 2004-05 to 2009-10; - 5 - ITA No. 781 of 2018  in order to circumvent the reply, Commissioner has referred to A.Ys. 2010-11 & 2011-12 and ITAT has confirmed the order;  for A.Ys. 2004-05 to 2009-10, assessee has been given the benefit of Section 10AA of the Act. With these submissions, he prayed for allowing this appeal. 6. Learned Senior Advocate further submitted that after the ITAT allowed assessee’s appeals for A.Ys. 2004-05 to 2009-10, Revenue challenged the same by filing appeals in this Court for A.Ys. 2004-05 to 2009-10 and the said appeals have been dismissed in I.T.As. No.184/2016, 185/2016, 266/2016, 267/2016, 268/2016, 269/2016 and 289/2016. 7. Shri. Sanmathi, learned Standing Counsel for Revenue submitted that in the order dated 23.03.2015, the Assessing Officer has not dealt with the aspect of Section 10AA of the Act nor any enquiry been conducted in that behalf. There is no error with the notice and the order passed - 6 - ITA No. 781 of 2018 by the revisional authority. He prayed that the matter may be remitted to the CIT for reconsideration. 8. We have carefully considered rival contentions and perused the records. 9. Undisputed facts of the case are, assessee has been given benefit under Section 10AA of the IT Act for A.Ys. 2004-05 and 2009-10 by the ITAT. The said order has attained finality. 10. Learned Senior Advocate is right in his submission that the basis on which the notice was issued was not in existence as on the date of passing the order by the CIT. In our opinion, the matter ought to have rested there. Interestingly, the CIT referred to the other two orders for the A.Ys. namely 2010-11 & 2011-12 and passed his order. Thus such an action on the part of the Revenue is a result of predetermined disposition by the CIT and punitive intention. We may record that, time and again, the Central Board of Direct Taxes has been issuing several Notifications, Circulars - 7 - ITA No. 781 of 2018 and instructions to the Officers of the Department to assist the assessees in filing proper returns. In contradistinction, the order of the CIT clearly demonstrates that he was determined to pass an order against the assessee and hence, referred to the A.Ys. 2010-11 and 2011-12, though specific reply was given by the assessee. 11. So far as the contention urged by the Revenue that Assessing Officer in his order dated 23.03.2015 has not dealt with Section 10AA of the Act, we may record that in his order4 giving effect to CIT’s order, the Assessing Officer had all the opportunity to examine the case on its merits. He has merely reproduced the order passed by the CIT in his order. It is indubitable that for the A.Ys. 2004-05 to 2009-10, assessee has been given the benefit of Section 10AA of the Act and that was the basis of notice. In that view of the matter and the fact that in the original Assessment order dated 23.03.2015, benefit has been given and only in the Notice under Section 263 of the Act, the benefit was sought to be denied, we are of 4 AO’s Order dated 28.12.2016 - 8 - ITA No. 781 of 2018 the view that the manner in which the Revenue has dealt, the case is purely punitive in nature. 12. In the light of the above discussion, the following: ORDER (a) Appeal is allowed. (b) Order dated 28.12.2016 for the A.Y. 2012-13 vide Annexure-F passed by the Assessing Officer and the order dated 31.05.2018 in ITA No.906/Bang/2016 vide Annexure-G passed by the ITAT, Bengaluru are set-aside. (c) The questions of law are answered in favour of the assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE SPS List No.: 1 Sl No.: 43 "