THE PRINCIPAL COMMISSIONER OF INCOME-TAX, VADODARA-1 vs. GUJARAT ENERGY TRANSMISSION CORPORATION LTD.

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TAXAP/173/2020HC GujaratGJHC24035234202011 September 2020Author: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH,HONOURABLE MR. JUSTICE J.B.PARDIWALA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the issue of reassessment maintainability where the tax liability under Section 115JB is not disturbed and exceeds the normal tax liability is no longer res integra. It relied on the judgment of the jurisdictional Gujarat High Court in India Gelatine and Chemicals Ltd. (supra), which observed that the Assessing Officer's jurisdiction is ousted even if a proposed disallowance under normal provisions is sustained, provided there is no addition to the tax liability computed under Section 115JB. The Tribunal noted that this view was also adopted by the Gujarat High Court in Motto Tiles (P.) Ltd vs. ACIT (2016). Consequently, the Tribunal allowed the assessee's appeal, quashing the reassessment notice and order.

What were the facts?

This is a tax appeal filed by the Revenue (The Principal Commissioner of Income-Tax, Vadodara-1) against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, dated October 4, 2019. The appeal pertains to Assessment Year 2008-09. The ITAT had allowed an appeal filed by the assessee, Gujarat Energy Transmission Corporation Ltd., against an order of the Commissioner of Income Tax (Appeals). The core of the dispute revolves around the validity of reassessment proceedings initiated by the Revenue.

What were the issues?

1. Whether, in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in quashing the reassessment notice issued under Section 148 of the Income Tax Act and holding the reassessment order passed under Section 147 of the Income Tax Act as null and void without going into the merits of the case? Assessee's Contention: The assessee argued that reassessment under Section 147/148 of the Act is not maintainable when the tax liability as per book profits computed under Section 115JB of the Act is not disturbed and also exceeds the total income determined as per normal provisions. The assessee relied on the jurisdictional High Court's judgment in India Gelatine and Chemicals Ltd. (supra). Revenue's Contention: The judgment does not record any specific contentions made by the Revenue in response to the assessee's argument regarding the maintainability of reassessment under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 115JB

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/173/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 173 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME-TAX, VADODARA-1 Versus GUJARAT ENERGY TRANSMISSION CORPORATION LTD. ========================================================== Appearance: MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 11/09/2020

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1.

This tax appeal is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal “C” Bench, Ahmedabad dated 4th October, 2019 in the ITA No.3440/Ahd/2015 for the A.Y.2008-09. 2. The Revenue has proposed the following question of law for the consideration of this Court; “Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in quashing the reassessment notice u/s.148 of the Income Tax Act and in holding the reassessment order u/s.147 of the Income Tax Act as null and void without going into the merits of the case?”

3.

The Tribunal, while allowing the appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), Vadodara, held as under; C/TAXAP/173/2020 ORDER “7. We have carefully considered the rival submissions. The limited controversy raised by way of additional ground whereby the Tribunal has been called upon to adjudicate as to whether re- opening under s. 147/148 of the Act is maintainable where tax liability as per book profits computed under s. 115JB of the Act is not disturbed and also exceeds the total income determined as per normal provisions. We find that the issue is no longer res integra in view of the judgment rendered by jurisdictional High Court. The Hon'ble Gujarat High Court in India Gelatine and Chemicals Ltd. (supra) has observed that in the absence of any addition to the tax liability of the assessee computed under s. 115JB of the Act (which exceeds the tax liability under normal provisions), the jurisdiction of the AO is ousted even if the proposed disallowane of expenditure by the AO under normal provisions is sustained. The view expressed in India Gelatine and Chemicals Ltd. (supra) was adopted by the Hon'ble Gujarat High Court in Motto Tiles (P.) Ltd vs. ACIT (2016) 386 ITR 280 (Guj).”

4.

In view of the above, we see no good reason to interfere with the order passed by the Tribunal.

5.

In the result, this appeal fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid

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