COMMISSIONER OF INCOME TAX-I. vs. ELMEX CONTROLS PVT. LTD.

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TAXAP/496/2007HC GujaratGJHC24040412200706 August 2008Bench: HONOURABLE MR. JUSTICE K.A.PUJ,HONOURABLE MR. JUSTICE BANKIM.N.MEHTA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed all the Tax Appeals filed by the Revenue. The Court answered the substantial question of law in the affirmative, in favour of the assessee and against the Revenue. This implies the Court found that the Appellate Tribunal was correct in dismissing the Revenue's appeals on the ground of low tax effect, even if based on an internal CBDT circular. The reasoning is that the Court had previously decided similar matters in favour of the assessee and against the Revenue in other cognate appeals (Tax Appeals No. 1402 to 1405 of 2007 and others). Therefore, for consistency and based on the prior detailed order, these appeals were also disposed of in the same manner. The operative direction was to dismiss the appeals.

What were the facts?

The Revenue, Commissioner of Income Tax, filed multiple Tax Appeals (Nos. 962 to 966 of 2006, 1493 to 1495 of 2006, 1880 of 2006, 406 of 2007, and 496 of 2007) against the orders of the Income Tax Appellate Tribunal (ITAT). The appeals challenged the ITAT's decision to dismiss the Revenue's appeals on the grounds of low tax effect. The ITAT had relied on an internal CBDT circular for this dismissal. The High Court had previously dealt with similar matters in Tax Appeals No. 1402 to 1405 of 2007 and other cognate matters, passing a detailed order.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in dismissing the appeal on the ground of low tax effect relying upon an internal Circular issued by the CBDT which is meant for department use and cannot be equated to a circular issued under Section 119 of the I.T. Act? Assessee's contentions: The judgment does not record specific contentions for the assessee. However, the framing of the question implies the assessee would argue that the ITAT's dismissal based on an internal circular for low tax effect was correct, as such circulars, if not issued under Section 119, are not binding on the assessee and the department's internal policy should not prejudice the adjudication of the appeal on merits. Revenue's contentions: The Revenue contended that the Appellate Tribunal erred in dismissing their appeal on the ground of low tax effect by relying on an internal CBDT circular. They argued that such internal circulars, not issued under Section 119 of the Income-tax Act, 1961, are for departmental guidance and cannot be the basis for dismissing an appeal, especially when the substantial question of law pertains to the interpretation of law and facts.

Which sections of the Income-tax Act were involved?

Section 260A,Section 119

AI-generated summary — verify with the full judgment below

TAXAP/962/2006 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 962 TO 966 of 2006 WITH TAX APPEAL No. 1493 TO 1495 of 2006 WITH TAX APPEAL No. 1880 of 2006 TAX APPEAL No. 406 of 2007 TAX APPEAL No. 496 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO

TAXAP/962/2006 2/3 JUDGMENT ==================================== COMMISSIONER OF INCOME TAX - Appellant(s) Versus DEEPAL H. MEHTA - Opponent(s) ==================================== Appearance : MR MANISH R BHATT for Appellant. MR SN SOPARKAR, SENIOR ADVOCATE WITH MRS SWATI SOPARKAR for Opponent. ==================================== CORAM : HONOURABLE MR.JUSTICE K.A.PUJ and HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Date : 06/08/2008 COMMON ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. The revenue has filed these Tax Appeals under Section 260A of the Income-tax Act, 1961 proposing to formulate the following substantial question of law for the consideration and determination of this Court :- Whether the Appellate Tribunal is right in law and on facts in dismissing the appeal on the ground of low tax effect relying upon the internal Circular issued by the CBDT which is meant for department use and cannot be equated to circular issued under Section 119 of the I.T. Act ? 2. All these tax appeals were admitted by this Court on different dates and more or less, substantial question of law is framed in similar manner. All these Tax Appeals were heard together by this Court. Similar

TAXAP/962/2006 3/3 JUDGMENT question was involved in Tax Appeals No.1402 to 1405 of 2007 and other cognate matters and a detailed order is passed by us in the said Tax Appeals. We have decided the said Tax Appeals in favour of the assessee and against the revenue and the question paused therein was answered in affirmative i.e. in favour of the assessee and against the revenue. 3. For the reasons stated and conclusions drawn therein and subject to the directions issued therein, we dismiss all these Tax Appeals filed by the revenue and question paused in all these Tax Appeals is answered in affirmative i.e. in favour of the assessee and against the revenue. 4. All these Tax Appeals are accordingly disposed of without any order as to costs. Sd/- [K. A. PUJ, J.] Sd/- [BANKIM N. MEHTA, J.] Savariya

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