ITP No.30 of 1999 IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION [INCOME TAX] ORIGINAL SIDE THE COMMISSIONER OF INCOME TAX. W.B.-III,CALCUTTA. Versus RAVI AUTO LTD. BEFORE: The Hon'ble JUSTICE ANIRUDDHA BOSE The Hon'ble JUSTICE ARINDAM SINHA Date:12th December, 2017. Appearance: Mr.M.P.Agarwal, Adv. ..for Applicant. The Court:-No one appears for the assessee in this reference application today. Earlier, this matter had been called on for hearing on 14th November, 2017 when too no one had appeared on behalf of the assessee. On that day we had directed notice to be issued upon the assessee. We do not find any record of service of notice. The matter was listed again on 5th December, 2017 on which date also assessee went un-represented and without passing any order we posted the matter to be listed under the heading To Be Mentioned today, i.e. 12th December, 2017. Though there is no record of service on the assessee we are taking up this matter for hearing as Mr. Agarwal, learned Advocate for revenue submits that this reference is below the tax effect as contemplated in Central Board of 2Direct Taxes (CBDT) circular no.21/2015 dated 10th December, 2015. As regards maintainability of the reference itself, Mr. Agarwals submission is that this reference is covered under the said circular dated 10th December, 2015, in particular, clause 10 thereof, which stipulates:-
10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.
Referring to
Section 119 of the Income Tax Act, 1961, Mr. Agarwal submits that this circular is binding on the tax authorities. In support of his submission he has relied on decisions in the cases of
UCO Bank Vs. Commissioner of Income Tax reported in (1999) 237 ITR 889 and
Paper Products Ltd. vs. Commissioner of Central Excise reported in (2001) 247 ITR 128. He has also brought to our notice a judgement of the Supreme Court of India in the case of
Commissioner of Income Tax Vs. Gemini Distilleries reported 3in (
2017)398 ITR 343, in particular the following passages therefrom.
Learned counsel for the respondents relied upon circular dated December 10, 2015 and specifically relied upon paragraph 10. We are of the considered opinion that the Central Board of Direct Taxes cannot issue any circular having retrospective operation. Respectfully following the above decision, we allow the instant appeals. The impugned order passed by the High Court dated November 2, 2011 in ITP No.30 of 1999 IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION [INCOME TAX] ORIGINAL SIDE THE COMMISSIONER OF INCOME TAX. W.B.-III,CALCUTTA. Versus RAVI AUTO LTD. BEFORE: The Hon'ble JUSTICE ANIRUDDHA BOSE The Hon'ble JUSTICE ARINDAM SINHA Date:12th December, 2017. Appearance: Mr.M.P.Agarwal, Adv. ..for Applicant. The Court:-No one appears for the assessee in this reference application today. Earlier, this matter had been called on for hearing on 14th November, 2017 when too no one had appeared on behalf of the assessee. On that day we had directed notice to be issued upon the assessee. We do not find any record of service of notice. The matter was listed again on 5th December, 2017 on which date also assessee went un-represented and without passing any order we posted the matter to be listed under the heading To Be Mentioned today, i.e. 12th December, 2017. Though there is no record of service on the assessee we are taking up this matter for hearing as Mr. Agarwal, learned Advocate for revenue submits that this reference is below the tax effect as contemplated in Central Board of 2Direct Taxes (CBDT) circular no.21/2015 dated 10th December, 2015. As regards maintainability of the reference itself, Mr. Agarwals submission is that this reference is covered under the said circular dated 10th December, 2015, in particular, clause 10 thereof, which stipulates:-
10. This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.
Referring to Section 119 of the Income Tax Act, 1961, Mr. Agarwal submits that this circular is binding on the tax authorities. In support of his submission he has relied on decisions in the cases of UCO Bank Vs. Commissioner of Income Tax reported in (1999) 237 ITR 889 and Paper Products Ltd. vs. Commissioner of Central Excise reported in (2001) 247 ITR 128. He has also brought to our notice a judgement of the Supreme Court of India in the case of Commissioner of Income Tax Vs. Gemini Distilleries reported 3in (2017)398 ITR 343, in particular the following passages therefrom. Learned counsel for the respondents relied upon circular dated December 10, 2015 and specifically relied upon paragraph 10. We are of the considered opinion that the Central Board of Direct Taxes cannot issue any circular having retrospective operation. Respectfully following the above decision, we allow the instant appeals. The impugned order passed by the High Court dated November 2, 2011 in I.T.A.no.887 of 2006 is set aside. The matter(s) is/are remitted back to the High Court for re- adjudication on the merits and in accordance with law.
Mr. Agarwals contention is that this authority is not applicable and the same relates to a circular being CBDT Instructions no.3 of 2011, dated 9th February, 2011 in which clause 11 reads as follows: 11. This instruction will apply to appeals filed on or after February 9, 2011. However, the cases where appeals have been filed before February 9, 2011 will be governed by the 4instructions on this subject, operative at the time when such appeal was filed.
He also brings to our notice another decision of the Supreme Court of India in the case of Director of Income Tax Vs. S.R.M.B. Dairy Farming(P.) Ltd. reported in [2017] 87 taxmann.com 288 (SC) from which we extract the following passage being para 8 : 8. The judgement took note of the fact that the Madras High Court, Kerala High Court, Chhattisgarh High Court and the Punjab and Haryana High Court had taken a contra view, opining that the existing Circular/Instruction prevailing at the relevant time when the appeal/reference was made would apply and there would be no retrospective application of the circular. On the other hand, the Bombay High Court, Madhya Pradesh High Court, Delhi High Court had taken the view, which was sought to be taken by the Karnataka High Court.
Citing the aforesaid paragraph Mr. Agarwal submits, the said circular thus applies to reference as well. On applicability of the circular to pending matters he drew 5our attention to paragraph 24 of the report in which the Supreme Court of India held as follows: 24. We are of the view that the matter needs to be put to rest and a clarity be obtained in view of the impact of this issue on pending cases before the High Courts as well as the cases which have been disposed of by various High Courts by applying the Circular of 2011 to pending litigations. In our view the matter has been squarely put to rest taking further care of the interest of the Revenue by the order passed by the three Judges Bench of this Court in Surya Herbal Ltd. case (supra), which had put two caveats even to the retrospective application of the Circular. The subsequent orders have been passed by the two Judges Bench without those orders being brought to the notice of the Court, a duty which was cast on the Department to have done so to avoid the ambiguity which has arisen. Thus, the said view of the three Judges Bench would hold water and the Circular would apply even to pending matters but subject to the two 6caveats provided in Surya Herbal Ltd. case (supra).
He further submits that points involved in this reference neither have cascading effect nor common principle involved in subsequent group of matters or number of matters and as such the two caveats provided in CIT vs Surya Herbal Ltd. [(2013) 350 ITR 300 (SC)] do not affect the case. On merits also, Mr. Agarwal first drew our attention to the application requiring statement from the Tribunal. The questions suggested are: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs.25,00,000/- paid during the year as Sales tax relating to the A.Y.1985-86 should be allowed for deduction even though the same was not added u/s.43B in the assessment of the assessment year 1985-86?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the order of the CIT(A) deleting disallowance of interest of 7Rs.2,14,369/- which did not relate to the relevant previous year as per the TAR filed by the assessee ? So far as the first question is concerned, there is concurrent finding of fact with regard to payment of sales tax which was actually made and, thus, the assessee was entitled to benefit of Section 43B of the Income Tax Act, 1961. We do not find such finding to be perverse. So far as the second question is concerned, he does not press the same. Having regard to the submissions of Mr. Agrawal, we do not think the result of this adjudication is going in favour of revenue. As such though this matter has been listed under the heading To Be Mentioned, we have heard it. However, in view of the aforesaid circumstances, as tax effect is below threshold and on merit also, both the questions are answered against the revenue and in favour of the assessee for reasons we have already indicated, the application is rejected and Rule discharged. (ANIRUDDHA BOSE, J.) (ARINDAM SINHA, J.)