COMMISSIONER OF INCOME TAX-II vs. HAZIRA LNG PVT LTD

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TAXAP/155/2012HC GujaratGJHC24042789201212 October 2022Bench: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR,HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law formulated in the present appeal was identical to the one in Tax Appeal No. 188 of 2012, which had already been answered against the Revenue and in favour of the Assessee. The Court referred to its own observation in the connected appeal, stating that the finding of the CIT(A) and the Tribunal regarding foreign exchange fluctuation gains not being connected to business activity was a finding of fact, and no substantial question of law arose. Consequently, the present Tax Appeal was disposed of by answering the substantial question of law against the Revenue and in favour of the Assessee. The Civil Application No. 1 of 2022 was rejected as it did not survive.

What were the facts?

The Revenue (Commissioner of Income Tax-II) filed the present Tax Appeal (No. 155 of 2012) challenging an order dated 30.09.2011 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 2750/Ahd/2009. This appeal was connected to another appeal, Tax Appeal No. 188 of 2012, which challenged the ITAT's order in ITA No. 2749/Ahd/2009. The High Court had admitted the present appeal to consider a substantial question of law. However, the connected appeal (Tax Appeal No. 188 of 2012) was dismissed on 25.07.2012. The issue in the present appeal, concerning the deletion of an addition of Rs. 6,09,97,186/- made by the Assessing Officer on account of gain on foreign exchange fluctuation, was identical to the issue in the dismissed appeal.

What were the issues?

1. Whether the High Court should entertain the appeal filed by the Revenue, given that the connected appeal involving an identical issue was dismissed on the ground that no substantial question of law arose? The Revenue argued that the present appeal raises a substantial question of law. The Assessee (Hazira LNG Pvt Ltd) contended that the issue is identical to the one decided in the connected appeal, which was dismissed by the High Court. The High Court, in the connected appeal (Tax Appeal No. 188 of 2012), had observed that the CIT(A)'s finding that the earning from foreign exchange fluctuations was not connected to the business activity was a factual finding affirmed by the Tribunal, and therefore, no substantial question of law arose. The Revenue's argument, if any, is not explicitly recorded beyond the general assertion of a substantial question of law.

AI-generated summary — verify with the full judgment below

C/TAXAP/155/2012 ORDER DATED: 12/10/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 155 of 2012 With CIVIL APPLICATION (FOR FIXING DATE OF HEARING) NO. 1 of 2022 In R/TAX APPEAL NO. 155 of 2012 ========================================================== COMMISSIONER OF INCOME TAX-II Versus HAZIRA LNG PVT LTD ========================================================== Appearance: MR. VARUN K PATEL, ADVOCATE (5953) for the Appellant(s) No. 1 MR B S SOPARKAR(6851) for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

Date : 12/10/2022

ORAL ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR) 1. This Tax Appeal is directed against the order passed by Income Tax Appellate Tribunal in ITA No. 2750/Ahd/2009 dated 30.09.2011. It is a common order passed by the Tribunal namely it was passed ITA No. 2749/Ahd/2009 connected with ITA No. 2750/Ahd/2009. 2. Against the aforesaid order of the Tribunal, two appeals were filed by the Revenue in Tax Appeal No. 188 of Page 1 of 3

C/TAXAP/155/2012 ORDER DATED: 12/10/2022 2012 (against the ITA No. 2749/Ahd/2009) and the present ITA i.e. Tax Appeal No. 155 of 2012 (against order passed in ITA No. 2750/Ahd/2009). The present Appeal came to be admitted to consider substantial question of law as formulated in the Appeal Memorandum and recorded in the order of admission dated 19.07.2012. However, the connected Appeal which came to be listed on 25.07.2012 i.e. Tax Appeal No. 188 of 2012 was disposed of or dismissed on 25.07.2012 by observing thus : “5.1 On the facts of the present case, the CIT(A) recorded a finding that earning of the assessee from foreign exchange fluctuations was not in connection with its business activity. The finding was in the realm of appreciation of facts and material, therefore, is factual in nature. Such a finding came to be affirmed by the Tribunal, which is a finding of fact of the authority. 6. We are in agreement with the view taken by the Tribunal. The findings and conclusions are proper and reasonable and are arrived at by correctly by applying principle of law enunciated in the judicial pronouncements. No substantial question of law arises for consideration.” 3. The issue involved in the present Appeal which relates to deleting the addition of Rs. 6,09,97,186/- made by the Assessing Officer, on account of gain on foreign exchange fluctuation, is similar and identical to the issue identical to Page 2 of 3

C/TAXAP/155/2012 ORDER DATED: 12/10/2022 the issue involved in Tax Appeal No. 188 of 2012 which has been answered in favour of assessee and against the Revenue, as noticed hereinabove. 4. In that view of the matter, the substantial question of law formulated in this Appeal is answered against the Revenue and in favour of Assessee in the light of the finding recorded in Tax Appeal No. 188 of 2012. 5. Consequently, the substantial question of law in this Appeal is answered against the Revenue. Present Tax Appeal disposed of accordingly.

Civil Application No. 1 of 2022 does not survive for consideration. Accordingly, it stands rejected. (ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) AMAR SINGH Page 3 of 3

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