M/A ANDRITZ HYDRO PVT. LTD. vs. COMMISSIONER OF INCOME TAX AAYAKAR BHAWAN FBD

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ITA/265/2010HC Punjab & HaryanaPHHC01093181201030 July 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the Tribunal's order. Regarding the assessee's submission that the CIT(A) had no power to remand after the Finance Act, 2001 amendment to Section 251, the Court observed that the issue was not the CIT(A)'s power to remand, but the Tribunal's power to remand the matter to the Assessing Officer. The Court found that the Tribunal had the power to remand. The Court also noted that the matter was only remanded to the Assessing Officer, and the assessee would be given a full opportunity to present its case. Therefore, the Court was unable to accept the assessee's submissions and dismissed the appeal.

What were the facts?

The assessee, M/s Andritz Hydro Pvt. Ltd., engaged in manufacturing and selling turbines and equipment, claimed a deduction of Rs. 6,45,53,688/- towards commission expenses for assessment year 2003-04. The Assessing Officer disallowed this claim due to lack of satisfactory documentary evidence. The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction after considering additional evidence and finding the expenditure expedient for business. The revenue appealed to the Income Tax Appellate Tribunal (Tribunal). The Tribunal noted that while some issues were remanded by the CIT(A), this specific issue was not. However, considering the voluminous additional documents produced before the CIT(A), the Tribunal decided to remand the matter back to the Assessing Officer for examination of this evidence, granting the assessee an opportunity to present its case.

What were the issues?

1. Whether the Tribunal erred in law by restoring the issue of commission to the CIT(A) based on an incorrect finding that additional evidence was not confronted to the Assessing Officer (AO)? (Section 260A of the Income Tax Act, 1961) 2. Whether the Tribunal's order is perverse as it ignores the CIT(A)'s findings that additional evidence was confronted to the AO? (Section 260A) 3. Whether the Tribunal erred in law by holding that additional evidence was not confronted to the AO, or that the CIT(A) admitted additional evidence in violation of Rule 46A, when no such ground of appeal or argument was advanced by the Revenue's DR? (Section 260A, Rule 46A of Income Tax Rules, 1962) 4. Whether the Tribunal decided the issue without giving the assessee an opportunity of being heard? (Section 260A) Assessee's contentions: The assessee argued that the Tribunal's observation regarding remand was erroneous, as the CIT(A) had obtained a remand report and made a decision considering it. The assessee also contended that the CIT(A) had no power to remand after the amendment to Section 251 by the Finance Act, 2001. The assessee further argued that the Tribunal's finding about non-confrontation of evidence was incorrect and that the Tribunal decided the issue without proper opportunity. Revenue's contentions: The judgment does not record specific contentions made by the revenue before the High Court.

Which sections of the Income-tax Act were involved?

Section 260A,Section 251

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 30.7.2010 M/s Andritz Hydro Pvt. Ltd. ....Appellant. Versus Commissioner of Income Tax ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Ashwani Taneja, Advocate and Ms. Jyoti, Advocate for the appellant. ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 20.11.2009 passed by the Income Tax Appellate Tribunal, Bench 'I', New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 316/Del/2009 for the assessment year 2003-04, proposing to raise the following substantial questions of law:- (a) Whether Tribunal erred in law in restoring the issue of commission to Ld. CIT (A) by recording incorrect finding that additional evidences were not confronted to Ld. A.O.? (b) Whether the order of Tribunal is perverse in as much as it ignores the findings recorded by Ld.

-2- CIT (A) that additional evidences were confronted to Ld. A.O.? (c) Whether Tribunal erred in law in holding that additional evidences were not confronted to Ld. A.O., or Ld. CIT (A) admitted additional evidences in violation of rule 46A when there was no such ground of appeal nor any such argument was advanced by Ld. DR? (d) Whether Tribunal decided the issue without giving opportunity of being heard?”

2.

The assessee is engaged in manufacture and sale of turbine and other equipments. In the course of assessment, it claimed deduction of Rs.6,45,53,688/- towards commission expenses. The Assessing Officer disallowed the same as he was not satisfied about the services allegedly rendered by the commission agents. The assessee failed to furnish documentary evidence in support of its case. On appeal, the Commissioner of Income Tax (Appeals) [in short “CIT (A)”] considered additional evidence led by the assessee and held that the assessee was able to establish the expenditure incurred as well as its expediency for its business. On further appeal to the Tribunal by the revenue, it was noticed that the CIT (A) was dealing with several issues and on some of the issues the matter was remanded while on this issue there was no remand and the documents being voluminous which were produced for the first time before the CIT (A), the remand would have been a better course. Accordingly, the matter was directed to be remanded to the Assessing Officer to examine the additional evidence -3- relied upon by the assessee after giving due opportunity to it.

3.

We have heard learned counsel for the assessee.

4.

Learned counsel for the appellant submits that observation of the Tribunal that there was remand in respect of some issues and no remand on the issue in question is erroneous as the CIT (A) had obtained the remand report and took decision after considering the said report. He also submits that the CIT (A) has no power to remand after amendment to Section 251 by Finance Act, 2001. 5. We are unable to accept the submission. Even if it is assumed that if remand report was considered by the CIT (A), it cannot be held that any substantial question of law arises from the order of the Tribunal.

6.

The matter has only been remanded to the Assessing Officer and the assessee will get full opportunity to put forward its points.

7.

As regards the submission that there was no power of remand neither any question has been proposed in the memo of appeal nor such a plea can be sustained under Section 251 of the Act. The power of CIT (A) is to confirm, reduce, enhance or annul the assessment. Under clause (c), the said authority can pass such orders as it thinks fit. The words “or he may set aside and refer the case back for fresh assessment” were deleted. We might have considered this submission but for the fact that it is not the order of the CIT (A) under which the matter has been remanded but by the Tribunal and it is not the case of the appellant that the Tribunal does not have any power to remand the matter to the Assessing Officer.

-4-

8.

No substantial question of law arises in the appeal.

9.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 30, 2010 (AJAY KUMAR MITTAL) gbs JUDGE

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