BETTS INDIA PVT LTD vs. THE ASST. COMMISSIONER OF INCOME TAX MARGAO

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TXA/15/2009HC BombayHCBM05000904200905 November 2019Author: HON'BLE SHRI JUSTICE M. S. SONAK,HON'BLE SHRI JUSTICE C. V. BHADANG5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, after noting the delay in the proceedings and the parties' failure to ascertain the status of the Full Bench reference, obtained the Full Bench's judgment dated October 16, 2009, in Income Tax Appeal No.1282/2007. The Full Bench held that there was no conflict between the decisions in Grasim Industries Limited and Indian Rayon Corporation Ltd. (which was followed in Scoop Industries Pvt. Ltd.). The Full Bench found that the ratio in both cases was in consonance with the Apex Court's decision in Distributors (Baroda) P. Ltd. vs. Union of India. The Full Bench concluded that for the purposes of deduction under Chapter VIA, the gross total income must be computed by deducting allowable deductions under Sections 30 to 43D, including depreciation under Section 32, even if the assessee had disclaimed current depreciation while computing total income under Chapter IV. The High Court found this Full Bench decision to be a complete answer to the second substantial question of law. Since the ITAT had followed Scoop Industries Pvt. Ltd., and the Full Bench clarified there was no conflict, the substantial question of law was answered against the appellant and in favour of the revenue.

What were the facts?

The assessee, Santosh Betts India Pvt. Ltd., filed an appeal before the High Court of Bombay at Goa against an order of the Income Tax Appellate Tribunal (ITAT). The assessment year is not explicitly stated, but the assessment order under challenge was dated February 28, 2005, passed by the Assistant Commissioner of Income Tax under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The ITAT's order upheld the validity of this assessment order and also ruled on the entitlement to deduction under Section 80IB. The appeal was admitted on two substantial questions of law on September 7, 2009. The ITAT's decision relied on the High Court's ruling in Scoop Industries Pvt. Ltd. vs. I.T.O.

What were the issues?

1. Whether the ITAT erred in upholding the validity of the Assessment Order dated 28th February, 2005 passed by the Respondent under Section 143(3) read with Section 147 of the Act? 2. Whether the ITAT erred in upholding that it was mandatory for depreciation to be granted while determining the Appellant's entitlement to the deduction under Section 80IB of the Act, even though the Appellant had not claimed such depreciation? Assessee's contentions: The assessee pressed for adjudication on the second question of law, arguing that the ITAT's decision relied on Scoop Industries Pvt. Ltd. (supra). The assessee pointed out that the High Court, in Income Tax Appeal No.1282/2007, had noted a conflict between Grasim Industries Limited vs. ACIT and Scoop Industries Pvt. Ltd. and referred the matter to a Full Bench. The assessee submitted that if the Full Bench decided against Scoop Industries Pvt. Ltd., the question would be decided in the assessee's favour. The assessee applied for deferment pending the Full Bench decision. Revenue's contentions: The Revenue's counsel was also unaware of the Full Bench's decision.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 80IB,Section 30,Section 32,Section 43D

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
1 txa15-09-dt. 05-11-19 Santosh IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO.15 OF 2009 Betts India Pvt. Ltd., L-78, Verna Electronic City, Verna, Salcete, Goa 403 722. ….. Appellant. Versus The Asstt. Commissioner of Income Tax, Circle l, Margao, Goa. ….. Respondent. Ms. Priyanka Kamat, Advocate for the Appellant. Ms. Susan Linhares, Standing Counsel for the Respondent. Coram : M.S. Sonak & C.V. Bhadang, JJ. Date : 5th November, 2019.

ORAL JUDGMENT : (Per M.S. Sonak, J.)

Heard Ms. Priyanka Kamat for the Appellant and Ms. Susan Linhares for the Respondent.

2.

By our order dated 07/09/2009, this appeal was admitted on the following substantial questions of law :

"

1.

Whether the ITAT erred in upholding the validity of the Assessment Order dated 28th February, 2005 passed by the Respondent under Section 143(3) read with Section 147 of the Act ?

2 txa15-09-dt. 05-11-19

2.

Whether the ITAT erred in upholding that it was mandatory for depreciation to be granted while determining the Appellant's entitlement to the deduction under Section 80IB of the Act, even though the Appellant had not claimed such depreciation ?"

3.

Ms. Kamat, learned Counsel for the Appellant quite correctly presses for adjudication on the second substantial question of law which, in fact, really the only substantial question of law which arises for determination in this matter.

4.

Ms. Kamat points out that when this Appeal was admitted on 7/9/2009 and the aforesaid questions of law were formulated, the order made by the Division Bench of this Court dated 19/12/2008 in Income Tax Appeal No.1282/2007 was undertaken to be placed on record. She points out that the impugned Judgment and Order made by the ITAT in the present case, entirely relies upon the decision of yet another Division Bench of this Court in Scoop Industries Pvt. Ltd. vs. I.T.O. & Ors.

1.

She further points out that by order dated 19/12/2008 in Income Tax Appeal No.1282/2007, matters be placed before the Hon'ble the Chief Justice for reference 1 289 ITR 195 (Bom.) 2 245 ITR 677 (Bom)

3 txa15-09-dt. 05-11-19 to a Full Bench. Ms. Kamat submits that if the Full Bench were to decide that the law laid down in Scoop Industries Pvt. Ltd. (supra) is no longer a good law then, the substantial question of law pressed for by her will have to be decided in favour of the Appellant and against the Revenue. She submitted that she is unaware as to whether the Full Bench has already decided the matter or not and, on this ground, applied for deferment of the proceedings.

5.

Since the matter has been adjourned from time to time and on one occasion the same was even dismissed for non-prosecution, we were quite reluctant to defer the hearing in this matter, any further.

6.

Ms. Linhares, learned Standing Counsel for the Respondent also stated that she is unaware as to whether the Full Bench has already disposed of the reference made to it.

7.

In a matter of this nature which has been pending since 2009 and adjourned on several occasions, least that we expect was that the learned Counsel for the parties at least make efforts to find out whether the reference before the Full Bench has been disposed or or not. At the present stage, this is not at all difficult, because all the Judgments and Orders delivered by the Bombay High Court are invariably uploaded on the dedicated website made for the purpose.

8.

Whilst the matter was proceeding, the Court Superintendents themselves accessed the internet and produced

4 txa15-09-dt. 05-11-19 before us the Judgment and Order dated 16.10.2009 delivered by the Full Bench of this Court in Income Tax Appeal No.1282/2007. We note that this was an exercise which could have been easily undertaken by the learned Counsel for the parties, but the same was not undertaken despite several adjournments.

9.

From the perusal of the Judgment and Order dated 16.10.2009 in Income Tax Appeal No.1282/2007, it is apparent that consonance with the ratio laid down by the Hon'ble Apex Court in 5 txa15-09-dt. 05-11-19 Appeal.

10.

Since, the ITAT in the impugned Judgment and Order, has merely followed our decision in Scoop Industries Pvt. Ltd. (supra) and, since, the Full Bench has now noted that there is no conflict whatsoever between the decisions in Scoop Industries Pvt. Ltd. (supra) and Grasim Industries Limited (supra), the substantial question of law, now framed, is required to be answered against the Appellant and in favour of the Revenue.

11.

As a result, this Appeal fails and is dismissed. There shall, however, be no order as to costs. C.V. Bhadang, J. M.S. Sonak, J.

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