Judgment
ITA no.03 of 2013 ITAT no.260 of 2012
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
Commissioner of Income Tax, Kolkata-III Versus
M/S Britannia Industries Ltd.
BEFORE:
The Hon'ble JUSTICE ANIRUDDHA BOSE The Hon'ble JUSTICE ARINDAM SINHA Ms. Das De, Adv.
..for the Revenue.
Mr. R.K. Murarka, Adv.
..for the Assessee.
Heard on :06.07.2017 and 11.07.2017. Judgment on :13.07.2017.
The Court: Revenue has preferred this appeal against order dated 19thJune, 2012 passed by the Income Tax Appellate Tribunal
"B" Bench Kolkata, in ITA no.14106/KOL/2011 pertaining to the assessment year 2005-06. By order dated 9thDecember, 2012 the appeal was admitted on the following question:
"(a) Whether in the facts and in the circumstances of the case the Learned Income Tax, Appellate Tribunal erred in law in allowing the deduction under section 80GGB in respect of donation made by the assessee to the political parties."
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The facts relevant for the purpose of this appeal are that the assessee made donation to political parties. In the return filed by the assessee this was not claimed as a deduction. The assessment was accordingly made. The assessee on preferring an appeal, the CIT(A) found and said that which is reproduced below:
"……….Examination of the breakup of expenses in schedule-3 of the Audited Accounts as well as in Annexure-III with regard to miscellaneous expenses reveal that the appellant made total contribution as donation during the year at Rs.2,25,72,928/- which includes Rs.834136/- as employees' contributions. Out of total donation of Rs.2,16,65,864/- (excluding employees' contribution) made by the appellant, it has added back on its own to the income disclosed in the return filed on 31.10.2005 and claimed deduction u/s 80G Chapter-VIA only for Rs.45,82,932/- i.e. 50% of the contribution made by it to Tsuanami Relief Fund. Therefore, the claim of the appellant that the assessing officer has not allowed deduction of political contribution u/s 80GGB of the IT Act, 1961 is found to be factually incorrect. In fact, the appellant on its own disallowed the contribution in the return of income and neither claimed as a deduction under Chapter-VIA of the IT Act in its return nor claimed by filing a revised return nor made a claim before the A.O. during the course of assessment proceedings.
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In view of the above and respectfully following the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT reported in 284 ITR 323, I am of the opinion that the appellant is not entitled to get deduction u/s80GGB claimed at this stage. Therefore this ground of the appeal is dismissed."
The assessee preferred an appeal before the Tribunal which by the impugned order said as follows:
"7. We have considered the rival submissions. It is noticed that the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (refer to supra) has held that the appellate authority being the tribunal did have the powers to direct the Assessing Officer to accept the claim of assessee, though the same has not been made in the original return nor has been claimed in the revised return. In the circumstances, respectfully following the ratio laid down by the Hon'ble Supreme Court in the case of Gotze (India) Ltd. (refer to supra), the Assessing Officer is directed to grant the assessee's claim of deduction u/s 80GGB of the donations made by the assessee to political parties in respect of Rs.45 lakhs given to Congress party and Rs.80 lakhs given to BJP."
Ms. Das De relied on a decision of the Supreme Court in the case of Jute Corporation of India Ltd. Vs. CIT reported in
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(1991) 187 ITR 688 (SC) to the portion in that judgment as extracted below:
"The next question which arises for consideration now is as to what order should be passed in the present circumstances. In view of the findings recorded by us, ordinarily, we should direct the High Court to call for the statement of case from the Tribunal and thereupon decide the matter afresh, but this procedure would be time consuming. Since we have already discussed the correct position in law, we do not consider it necessary to follow the usual procedure. Since the view taken by the Income tax Appellate Tribunal is not sustainable in law, we grant leave against the order of the Income tax Appellate Tribunal under article 136 and set aside the same and remit the matter to the Income tax Appellate Tribunal to consider the merits of the deduction permitted by the Appellate Assistant Commissioner. If the Tribunal thinks it necessary, it may remand the matter to the Appellate Assistant Commissioner (now Deputy Commissioner of Appeals) for rehearing. The appeal is, accordingly, disposed of. There will be no order as to costs."
She also relied on another decision of the Supreme Court in the case of the Additional Commissioner of Income Tax, Gujarat vs. Gurjargravures Private Ltd. reported in (1978) 111 ITR 1 to submit that in similar facts the Supreme Court held that it was not competent for the Tribunal to hold that the Appellate
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Assistant Commissioner should have entertained the question of relief for exemption under section 84 when no such relief had been claimed before the I.T.O. She however then submitted that in view of the later judgment of the said court in the case of
Goetze (India) Ltd. Vs.CIT reported in (2006) 284 ITR 326 (SC)
the question was covered against Revenue. Mr. Murarka, in addition to Goetze (India) Ltd. (supra), relied on another judgment of the Supreme Court in the case of
CIT Vs. Mahalaxmi Sugar Mills Co. Ltd. reported in (1986) 160 ITR 920 (SC) in which, inter alia, the following was said.
"In the second place, there is a duty cast on the Income tax Officer to apply the relevant provisions of the Indian Income tax Act for the purpose of determining the true figure of the assessee's taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set-off, it cannot relieve the Income tax Officer of his duty to apply section 24 in an appropriate case."
In Goetze (India) Ltd. (supra) the Supreme Court had before it the question as to whether the assessee could make a claim for deduction other than by filing a revised return. The assessee had in that case sought to claim the deduction by way of a letter to the Assessing Officer. The Supreme Court
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dismissed the Civil Appeal preferred by the assessee but said as follows:
"4……..However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income tax Appellate Tribunal under section 254 of the Income tax Act, 1961. There shall be no order as to costs."
The similarity on facts between the case at hand and the assessee in Goetze (India) Ltd. (supra) is that the respective deductions were not claimed before the Assessing Officer. In this case the CIT(A) dismissed the appeal of the assessee following Goetze (India) Ltd. (supra) in which the Supreme Court had declared that the issue was limited to the power of the assessing authority and does not impinge on the power of the Tribunal under section 254 of the Act. Hence, the CIT(A) held in favour of the Revenue at that stage and the Tribunal thereafter, in favour of the assessee.
In Jute Corporation of India Ltd.(supra) on similar facts the Supreme Court remitted the matter to the Tribunal to consider the merits of the deduction raised before and permitted by the Appellate Assistant Commissioner. Though Ms. Das De submitted, such direction meant that the deduction was not allowed, we see the direction as being one to consider the merits of the deduction and not the deductibility itself.
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The facts in Gurjargravures Private Ltd.(supra) were that the assessee therein had not claimed exemption under section 84 before the I.T.O and the assessment was completed accordingly. The assessee then appealed to the Appellate Assistant Commissioner and one of the grounds of appeal was that the I.T.O had erred in not giving the assessee any benefit under section 84 of the Act. The Appellate Assistant Commissioner dismissed the appeal on the ground that the question of error on the part of the I.T.O did not arise as no claim for exemption had been made before him. On further appeal the Tribunal took a different view. On these facts the Tribunal referred the following question to the Gujarat High Court.
"Whether on the facts and in the circumstances of the case it was competent for the Tribunal to hold that the Appellate Assistant Commissioner should have entertained the question of relief u/s 84, and to direct the income tax officer to allow necessary relief?"
The Supreme Court in answering the question raised before the High Court said, inter alia, as follows:
"…….We are not here called upon to consider a case where the assessee failed to make a claim though there was evidence on record to support it, or a case where a claim was made but no evidence or insufficient evidence was adduced in support. In the present case neither any claim was made before the income tax
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officer, nor was there any material on record supporting such a claim. We therefore hold that on the facts of this case, the question referred to the High Court should have been answered in the negative."
There is no conflict between the Gurjargravures Private Ltd. (supra) and Goetze (India) Ltd. (supra). In the former a claim for exemption was for the first time put up before the Appellate Assistant Commissioner who rejected the claim as not made before the I.T.O. This rejection was set aside by the Tribunal with direction upon the Appellate Assistant Commissioner to entertain the question of relief under section 84, claimed by the assessee in that case. The Supreme Court held that it was not competent for the Tribunal to have done so. The distinction between the two authorities eliminating any conflict is that in Gurjargravures Private Ltd. (supra) the competence of the Tribunal to direct the Appellate Assistant Commissioner to entertain a claim not made before the I.T.O was found to be lacking. In Goetze (India) Ltd. (supra) the Supreme Court held that the assessing Authority's power was limited but not that of the Tribunal in the context of dealing with a claim of the assessee therein not put forward before the Assessing Officer. In Gurjargravures Private Ltd. (supra) the Tribunal itself did not consider to allow the claim for relief.
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In view of the aforesaid we answer the question in the negative and in favour of the assessee. The appeal is accordingly dismissed.
(Aniruddha Bose, J.)
(Arindam Sinha, J.)
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