The ITO, Ward-1(1),, Bhavnagar v. Smt. Binaben Nishitbhai Mehta, Bhavnagar

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER ITA NO.2080/AHD/2007 ASSESSMENT YEARS: 2004-2005 INCOME TAX OFFICER WARD 1(1) AAYKAR BHAVAN NAKU BAUG NEAR JASHONATH CIRCLE BHAVNAGAR. V/S SMT. BINABEN NISHITBHAI MEHTA C/O. STEELCAST LTD. RUVAPARI ROAD BHAVNAGAR. PAN NO. ACTPM 4899 E (APPELLANT) (RESPONDENT) FOR DEPT. : SHRI RAJA RAM SAH SR. DR FOR ASSESSEE : SHRI BANDEJ SOPARKAR C.A. O R D E R PER SHRI N.S.SAINI A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEALS)-XIX AHMEDABAD DATED 28.02.2007 FOR AS SESSMENT YEAR 2004-2005 BY TAKING THE FOLLOWING GROUND OF APPEAL. 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DIRECTING TO DELETE THE ADDITION OF RS.6 90 500/- MADE BY THE AO . ON ACCOUNT OF LONG TERM CAPITAL GAIN ON TRANSFER OF SH ARE. 2. BOTH THE PARTIES AGREED BEFORE US THAT THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) HAS DELETED THE ADDITION MADE BY THE AO OF RS.6 90 500/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON TRANSFER OF SHARES AND AS THE RATE OF TAX APPLICABLE TO LONG T ERM CAPITAL GAIN WAS 20% THEREFORE THE TAX EFFECT IN THIS APPEAL IS BELOW R S.2 00 000/-. IN VIEW OF THE CBDT INSTRUCTION NO.2/2005 DATED 24-10-2005 THE AP PEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 2 3. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT V. CONCORD PHARMACEUTICALS REPORTED IN (2009) 317 ITR 395 (GUJ) HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASES. HON BLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 20. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE OF FILING OF AN APPEAL A CIRCULAR IS NOT IN FORCE OR CERTAIN EX CEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DECIDING THIS APPEAL IN SUCH CASES THE TRIBUNAL W ILL HAVE TO GIVE DUE WEIGHTAGE TO THE PROVISIONS CONTAINED IN THE CIRCUL AR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE APPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P ) LTD. (2008) 214 CTR 389 (BOM) THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE AP PLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS SUCH PENDING MATERS CANNOT BE DECI DED ON THE BASIS OF CIRCULARS / INSTRUCTIONS. IN CIT V. PITHWA ENGI NEERING WORKS 276 ITR 519 (BOM) THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIAL NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CIRCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. TH E DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEALS / REFERE NCES WHEREIN THE TAX IMPACT IS MINIMAL IRRESPECTIVE OF THEIR DATE O F FILING. 21. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS REPEATEDLY ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGME NT OF TERRITORIAL HIGH COURT OR SUPREME COURT THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS AND IN TERMS OF THE LAW DECLARED B Y THE SUPREME COURT OR BY THE TERRITORIAL HIGH COURT. HOWEVER O N THIS GROUND THE MATTERS CANNOT BE REMANDED TO THE TRIBUNAL DIRECTIN G THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISE D BY THE DEPARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE T HERE BEING AN EXCEPTION THE DEPARTMENT HAS MISSED THE BUS AND SE COND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER IN MA TTERS WHERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS DISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER AN INDULGENCE IS 3 REQUIRED TO BE SHOWN BY THIS COURT AND FOR THIS LIM ITED PURPOSES THE DEPARTMENT IS PERMITTED TO MOVE AN APPROPRIATE APPL ICATION BEFORE THE TRIBUNAL FOR DECIDING THE APPEAL ON MERITS. 22. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIGHTAG E SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE CIRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE THE NEWLY INSERTED PROVISIO NS CONTAINED IN SECTION 268A(4) MAKE IT OBLIGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCULAR. IT IS NOT OPEN FOR THE DEPARTMENT TO CON TEND THAT CIRCULARS ARE INTERNAL MATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE THAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAI NLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS INSTRUCTIONS OR CI RCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF FILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIVE INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOGNIZES SUCH RIGHT OF THE BOARD T O REGULATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR TH E TERRITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION IT IS NO T OPEN TO THE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCRIBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NO T THE DECISION OF HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT . IT IS HOWEVER EQUALLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DECISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OBJECTION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. 23. CONSIDERING ALL THE AFORESAID ISSUES WE DISMIS S ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTMENT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERIT S WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL EITHER I N THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECI FIC CONTENTION THAT A PARTICULAR APPEAL IS COVERED BY AN EXCEPTION AND DE SPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFEC T. IT IS EXPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHILE APPLYING THE RELEVANT CIRCULAR TO THE FATS OF THE CASE AT TH E TIME OF DECIDING APPEALS. 4 4. AT THE TIME OF HEARING BEFORE US THE LD. DEPAR TMENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH WHETHER THIS APPEAL FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDED IN BO ARDS INSTRUCTION NO.2/2005 DATED 24-10-2005 THE SUBJECT-MATTER OF T HE APPEALS ARE COVERED BY ANY OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT OR OF SUPREME COURT ANY SUBSTANTIAL QUESTION OF LAW IS INVOLVED OR NOT. THE LD. DR STATED THAT IN THIS APPEAL THE ISSUES ARE FACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVIDED BY BOARDS INSTRUCTION OR AN Y OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CONCO RD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN BO ARDS INSTRUCTION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHO ULD BE CONTESTED IRRESPECTIVE OF REVENUE EFFECT: (I) WHERE REVENUE AUDITED OBJECTION IN THE CASE HA S BEEN ACCEPTED B THE DEPARTMENT (II) WHERE THE BOARDS ORDER NOTIFICATION INSTRUC TION OR CIRCULAR IS THE SUBJECT-MATTER OF AN ADVERSE ORDER. (III) WHERE PROSECUTION PROCEEDINGS ARE CONTEMPLATE D AGAINST THE ASSESSEE. (IV) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVI SIONS OF THE ACT ARE UNDER CHALLENGE. 5. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFF ECT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CONCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CON CORD PHARMACEUTICALS (SUPRA) WE DISMISS THIS APPEAL OF THE REVENUE. 6. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON THIS 22 ND DAY OF APRIL 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 22 ND DAY OF APRIL 2010 PARAS* 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XIX AHMEDABAD. 4. THE CIT. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. DATE INITIALS 1. DRAFT DICTATED ON 22.04.2010 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 22.04.2010 ------ ------------- 3. DRAFT PROPOSED & PLACED 22.04.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 22.04.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 22.04.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- ---- ---------------- 7. FILE SENT TO THE BENCH CLERK 22.04.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE --------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------