Interglobe Enterprises Ltd.,, Gurgaon v. DCIT, New Delhi, Income Tax Appellate Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

ITA 338/DEL/2017

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Acts

Section 250(6) r.w.s. 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation to Section 251(2) of I.T. Act;
u/s 14A of the Income Tax Act, 1961 (Act) read with Rule 8D of the Income Tax Rules (rules), 1962.
u/s 14A of the Income Tax Act (Act) read with Rule 8D(ii) of the Income tax Rules, 1962. 1.1
Order U/s 143(3) of the Income Tax Act, 1961 (I.T. Act for short)
section 143(3) of the Income Tax Act, 1961
sub-section (1) of section 246A (7)
Section 250(6) of I.T. Act,
U/s 250(6) of I.T. Act
11 of 14 I.T. Act

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Smart Summary

Factual and Procedural Background

This appeal arises from an Assessment Order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2012-13 on 23.03.2015. The Assessee (Interglobe Enterprises Ltd.) filed an appeal before the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)]. The Ld. CIT(A) recorded that the Assessee did not appear for the hearing, observed that the Assessee appeared not to be interested in prosecuting the appeal, and dismissed the appeal by a summary order dated 17.11.2016.

The Assessee thereafter filed the present appeal before the Income Tax Appellate Tribunal (ITAT) challenging the Ld. CIT(A)'s order. Before the ITAT, both sides agreed that the impugned order may be set aside and the issues restored to the file of the Ld. CIT(A) for a fresh decision. The ITAT heard the matter, considered the record and statutory provisions governing the procedure of the Commissioner (Appeals), and pronounced its order on 03/01/20.

Legal Issues Presented

Whether the Learned Commissioner of Income Tax (Appeals) was justified in dismissing the Assessee's appeal in limine for non-prosecution without disposing of the appeal by a speaking order stating points for determination, decisions thereon and reasons, as required by Section 250(6) of the Income Tax Act.
Whether the Assessing Officer erred in computing the disallowance under Section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules (specifically, treatment of financial expenses of Rs. 19,51,133 and interest cost of Rs. 6,17,357).
Whether the Assessing Officer erred in computing credit of Minimum Alternate Tax (MAT) under Section 115JAA of the Income Tax Act (difference claimed: Rs. 1,245,07,560 vs. Rs. 1,25,65,421 as per return).
Whether the Assessing Officer erred in not allowing credit of prepaid taxes amounting to Rs. 4,46,31,830 claimed in the return and supported by Form 26AS and TDS certificates.

Arguments of the Parties

Appellant's Arguments (Assessee)

The impugned order of the Ld. CIT(A) was passed in violation of the principles of natural justice because the Appellant was not afforded an opportunity of being heard.
The Ld. CIT(A) wrongly concluded that the Appellant intentionally and willfully did not cooperate and was not interested in prosecuting the appeal.
The Assessing Officer erred in computing the disallowance under Section 14A read with Rule 8D(ii) by including financial expenses of Rs. 19,51,133 and interest cost of Rs. 6,17,357 (the latter allegedly already disallowed by the Appellant in its return).
The Assessing Officer erred in computing the MAT credit under Section 115JAA, resulting in an incorrect set-off amount.
The Assessing Officer erred in not allowing credit of prepaid taxes of Rs. 4,46,31,830 despite supporting documents (Form 26AS and TDS certificates).

Respondent's / Ld. CIT(A)'s Position (as reflected in the record)

The Ld. CIT(A) recorded that the case was listed for hearing on 27/06/2016. An adjournment application dated 27/06/2016 was filed but it was signed by a person who was not the authorised representative of the company. A subsequent application dated 29/06/2016 (received on 30/06/2016) signed by the authorised representative Sachin Mehta, with an original power of attorney, sought 15 days' time to appear.
Given that no one appeared after the requested period, the Ld. CIT(A) concluded that the authorised representative did not appear and that the Appellant was not interested in taking up the matter and making submissions; therefore, he dismissed the appeal.
At the ITAT hearing both sides agreed that the impugned order should be set aside and the issues restored to the file of the Ld. CIT(A) for a fresh decision in compliance with Section 250(6) of the Income Tax Act.

Table of Precedents Cited

No judicial precedents (case law) were cited in the provided opinion; only statutory provisions and rules were relied upon.

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal examined the record of proceedings before the Ld. CIT(A) and the relevant statutory provisions governing appeals to the Commissioner (Appeals), in particular Section 250 (sub-sections (4), (5) and (6)) and Section 251 (sub-section 1(a), 1(b) and the Explanation to Section 251(2)), as reproduced in the opinion. The Tribunal highlighted the following points, based strictly on the material in the opinion:

The statutory provision under Section 250(6) requires that the order of the Commissioner (Appeals) disposing of an appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision.
The Tribunal noted that the Ld. CIT(A) had passed a summary dismissal stating that the Appellant was not interested in prosecuting the appeal because no one appeared after an adjournment request. The Tribunal held that this amounted to a non-speaking or summary order and that the Ld. CIT(A) had not decided the appeal on merits.
Applying the statutory scheme (Section 250 read with relevant portions of Section 251), the Tribunal concluded that the Ld. CIT(A) was obliged to state the points for determination and give reasons for his decision on each point; accordingly, the Tribunal found that the Ld. CIT(A) erred in dismissing the appeal in limine for non-prosecution without discharging that obligation.
The Tribunal observed (as recorded in the opinion) that it is "amply clear that Ld. CIT(A) has no power to dismiss appeal in limine for non-prosecution of appeal by the assessee" in the manner done here, given the statutory requirements to decide and give reasons on the points arising in the appeal.
Both parties before the Tribunal agreed that the impugned order should be set aside and the issues restored to the file of the Ld. CIT(A) for a fresh order in compliance with Section 250(6). The Tribunal accepted this stance and directed that the Ld. CIT(A) pass a fresh speaking order on merits on the disputed issues in accordance with Section 250(6).

The Tribunal's analysis therefore focused on procedural fairness and statutory obligations of the Commissioner (Appeals) — specifically the duty to produce a written order stating points for determination and reasons — rather than on the substantive correctness of the Assessing Officer's computations (which were remitted for fresh consideration).

Holding and Implications

Holding: The Tribunal set aside the impugned order dated 17.11.2016 passed by the Ld. CIT(A) and directed the Ld. CIT(A) to pass a fresh, speaking order on merits on the issues in dispute in accordance with Section 250(6) of the Income Tax Act. The opinion records the outcome as:

Assessee's appeal is treated as partly allowed for statistical purposes; the impugned order of the Ld. CIT(A) dated 17.11.2016 is set aside and the matter is restored to the file of the Ld. CIT(A) with a direction to decide the issues on merits by a speaking order under Section 250(6) of the Income Tax Act.

Implications (direct effect): The direct consequence is that the Ld. CIT(A) must re-hear or otherwise consider the appeal and issue a reasoned order disposing of the points for determination and giving reasons for each decision. The substantive issues raised by the Appellant (disallowance under Section 14A read with Rule 8D; computation of MAT credit under Section 115JAA; credit of prepaid taxes supported by Form 26AS) remain undecided on the merits by the Tribunal and are to be decided afresh by the Ld. CIT(A).

Broader implications: The opinion does not assert that a new legal precedent has been laid down; it addresses the procedural failing in the Ld. CIT(A)'s order and mandates compliance with statutory requirements for issuing a speaking order. No additional or broader precedent-setting consequences are discussed in the provided opinion.

Order pronouncement: The order was pronounced in open court on 03/01/20 by Sudhanshu Srivastava (Judicial Member) and Anadee Nath Misshra (Accountant Member), as recorded in the provided opinion.

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Interglobe Enterprises Ltd.,, Gurgaon v. DCIT, New Delhi

PER ANADEE NATH MISSHRA, AM (A) This appeal by Assessee is filed against the order of Learned Commissioner of Income Tax (Appeals)-4, New Delhi, [Ld. CIT(A), for short] dated 17.11.2016 for Assessment Year 2012-13. The grounds of appeal are as under:

1. That on the facts and circumstances of the case and in law, the order passed is bad in law having been passed in violation of the principles of natural justice without affording an opportunity of being heard to the appellant. 1.1 That the Ld. Commissioner of Income Tax- Appeals [CIT(A)] erred in holding that appellant had intentionally and willfully not cooperated during the proceedings before him and was not interested in taking up the matter and making submissions. ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 2 of 14

2. Without prejudice, the Ld. CIT(A) has erred in confirming the erroneous computation of disallowance by the Ld. Assessing Officer u/s 14A of the Income Tax Act, 1961 (Act) read with Rule 8D of the Income Tax Rules (rules), 1962. The appellant craves leave to add, to alter, amend or vary from the above grounds of appeal at or before the time of hearing. (B) The Assessment Order U/s 143(3) of the Income Tax Act, 1961 (I.T. Act for short) was passed on 23.03.2015 by Assessing Officer (AO, for short). The relevant portion of the Assessment Order is reproduced as under: ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 3 of 14 ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 4 of 14 ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 5 of 14 ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 6 of 14 ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 7 of 14 ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 8 of 14 ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 9 of 14 (B.1) The Assessee filed appeal before the Ld. CIT(A). As the assessee did not appear before the Ld. CIT(A), the Ld. CIT(A) concluded that the Assessee was not interested in prosecuting its appeal, and he dismissed the Assessees appeal with the following observations in his aforesaid impugned order dated 17.11.2016: This appeal is filed on 20/04/2015 against the order dated 23/03/2015 passed by Dy. Commissioner of income Tax, Circle 12(2), New Delhi (hereinafter referred to as the "AO") under section 143(3) of the Income Tax Act, 1961 for the Assessment year 2012-

2. The case was fixed for hearing on 27/06/2016 when an adjournment application dated 27/06/2016 was filed which was signed by some Vikas Walia for Sachin Mehta. It is clear that it was not signed by the authorized representative of the company. After that another application dated 29/06/2016 was filed in the dak on 30/06/2016 signed by Sachin Mehta along with original Power of Attorney in which he was authorized by the company. In this application a time of 15 days was. sought to appear. Normally the authorized representative appears seeking another date which is given at the same time. Now in such a situation it is expected that the AR of the appellant would appear himself after the period of time requested by him. In this case nobody appeared so far to present the matter before me. It seems that the appellant is not interested in taking up the matter and make the submissions. Therefore I hereby dismiss the appeal. ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 10 of 14

3. The appeal is dismissed. (C) The Assessee filed this present appeal in Income Tax Appellate Tribunal (ITAT, for short), against the impugned order dated 17.11.2016 of the Ld. CIT(A). We find from the perusal of record, that the following grounds of appeal were raised by the Assessee before the Ld. CIT(A).

1. That the Ld. Assessing Officer has erred on facts and in law in considering the financial expenses of Rs. 19,51,133 while computing the disallowance u/s 14A of the Income Tax Act (Act) read with Rule 8D(ii) of the Income tax Rules, 1962. 1.1 Without prejudice, the Ld. Assessing Officer has erred on facts and in law in considering the interest cost of Rs. 6,17,357/- while computing the disallowance under Rule 8D(ii) without appreciating that the same was already disallowed by the appellant in its return of income.

2. That the Ld. Assessing Officer has erred on facts and in law in computing credit of Minimum Alternate Tax (MAT) to be set off in terms of provisions of Section 115JAA of the Act at Rs. 1,245,07,560/- as against the amount of Rs. 1,25,65,421.

3. That the Ld. Assessing Officer has erred on facts and in law in not allowing credit of prepaid taxes amounting to Rs. 4,46,31,830 claimed in the return of income despite of the same being supported by Form 26AS and TDS certificates. The appellant craves leave to add, to alter, amend or vary from the above grounds of appeal at or before the time of hearing. (C.1) However, the Ld. CIT(A) in his aforesaid impugned order dated 17.11.2016, has not disposed off various grounds of appeal through a speaking order on merits. In fact, the Ld. CIT(A) has not decided the appeal on merits, and has, instead dismissed assessees appeal in a summary manner while observing: It seems that the appellant is not interested in taking up the matter and make the submissions. This is in violation of Section 250(6) of I.T. Act, which requires the Ld. CIT(A) to state the points for determination, and give decision thereon with reasons. The relevant provisions under ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 11 of 14

I.T. Act regarding procedure in appeal, and powers of the Commissioner [Appeals] are contained in Sections 250 and 251 of I.T. Act, which are reproduced below for ready reference:

250. (1) The Commissioner (Appeals) shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the Assessing Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal (a) the appellant either in person or by an authorized representative; (b) the Assessing Officer, either in person or by a representative. (3) The Commissioner (Appeals) shall have the power to adjourn the hearing of the appeal from time to time. (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). (5) The Commissioner (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. [(6A) In every appeal, the Commissioner (Appeals), where it is possible, may hear and decide such appeal within a period of one year from the end of the financial year in which such appeal is filed before him under sub-section (1) of section 246A (7) On the disposal of the appeal, the Commissioner (Appeals) shall communicate the order passed by him to the assessee and to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers (a) In appeal against an order of assessment, may confirm, reduce, enhance or annual the assessment (aa) In appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 12 of 14 Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) In an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) In any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. Se More (C.2) A perusal of the above provisions of law shows that U/s 250(6) of I.T. Act the Ld. CIT(A) was obliged to dispose of the appeal in writing after stating the points for determination and to then pass an order on each of the points which arose for consideration; and the Ld. CIT(A) was further obliged to state the reasons for his decision on each such points which arose for determination. In the present appeal before us, the Ld. CIT(A) has passed a summary order without deciding the issues on merits. This is in violation of Section 250(6) of I.T. Act, which requires the Ld. CIT(A) to state the points for determination, and give decision thereon with reasons. In view of the foregoing and on careful perusal of Section 250(6) r.w.s. 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation to Section 251(2) of I.T. Act; it is amply clear that Ld. CIT(A) has no power to dismiss appeal in limine for non-prosecution of appeal by the assessee. (C.3) At the time of hearing before us, both sides were in agreement that the impugned order of Ld. CIT(A) may be set aside, and the disputed issues in the present ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 13 of 14 appeal may be restored to the file of the Ld. CIT(A) for fresh order in compliance of Section 250(6) of I.T. Act; having regard to the fact that the Ld. CIT(A) had not decided the issues on merits. (D) We have heard both sides carefully. We have perused the materials available on record. We are of the view that the Ld. CIT(A) erred in dismissing Assessees appeal on merits in a summary manner, without giving detailed reasons for his order, on various grounds of appeal before him. We further hold that the Ld. CIT(A) erred in passing a non-speaking order on each of the points which arose for his consideration and he failed in discharging the statutory obligation to state the reasons for his decision on each such points, which arose for determination in assessees appeal before the Ld. CIT(A). In view of the foregoing, and as both sides have agreed to this at the time of hearing before us, we set aside the impugned order dated 17.11.2016 of Ld. CIT(A); and we direct the Ld. CIT(A) to pass fresh order, a speaking order on merits on the issues in dispute, in accordance with Section 250(6) of I.T. Act. (E) In the result, Assessees appeal is treated as partly allowed for statistical purposes. Order pronounced in the open court on 03/01/20. Sd/- Sd/- (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03/01/20. Pooja/- ITA No.- 338/Del/2017. Interglobe Enterprises Ltd. Page 14 of 14 Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT(Appeals)

5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order

Interglobe Enterprises Ltd.,, Gurgaon v. DCIT, New Delhi

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments (Assessee)

Respondent's / Ld. CIT(A)'s Position (as reflected in the record)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Interglobe Enterprises Ltd.,, Gurgaon v. DCIT, New Delhi

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