M/S AJMER VIDYUT VITRAN NIGAM LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2

Facts

The appeals before the High Court of Judicature for Rajasthan, Bench at Jaipur, involved M/s Ajmer Vidyut Vitran Nigam Limited (the assessee) and the Assistant Commissioner of Income Tax/Principal Commissioner of Income Tax (the revenue). The appeals challenged orders passed by the Income Tax Appellate Tribunal (ITAT). Several appeals were filed with a delay, for which applications under Section 5 of the Limitation Act were allowed, condoning the delay. The parties agreed that the disputes were covered by a previous judgment of the same court dated December 21, 2017, in M/s. Ajmer Vidyut Vitran Nigam Limited Vs. Assistant Commissioner of Income Tax, Circle-2, Ajmer (D.B. Income Tax Appeal No. 298/2016 and other connected matters). In that prior judgment, the matters were remanded back to the ITAT.

Held

The High Court held that the appeals were squarely covered by its previous judgment dated December 21, 2017. Consequently, the order passed by the Income Tax Appellate Tribunal was set aside. The matters were remanded back to the ITAT with a direction to reconsider them in light of the Notification dated January 18, 2002. Parties were granted liberty to place all supporting documents before the ITAT. The High Court also noted that the earlier set of appeals, remanded in 2017, had not yet been decided despite over a year lapse. Therefore, a specific direction was issued for the ITAT to decide both the present and earlier set of appeals within six months from March 7, 2019. The ratio decidendi is that if a statutory notification impacts the status of an assessee, the tax authorities and the Tribunal must consider it, and failure to do so warrants a remand for reconsideration.

Key Issues

1. Whether the Income Tax Appellate Tribunal erred in its assessment, considering the assessee's status under a notification issued by the State Government on January 18, 2002? (Question of law and fact, turning on the interpretation of the notification and its impact on the assessee's tax liability). Assessee's Contentions: The assessee argued that the ITAT's order was based on wrong presumptions, particularly in considering the company's status under the Companies Act, when it should have been considered under the State Government's Notification dated January 18, 2002. They relied on the High Court's previous judgment which acknowledged the applicability of this notification. Revenue's Contentions: The revenue did not explicitly record any contentions separate from agreeing that the matter was covered by the previous High Court judgment. The previous judgment indicated that the basis of the ITAT's consideration, treating the assessee under the Companies Act, was required to be reconsidered.