NEW ERA SHIPPING LTD., vs. THE ASSISTANT COMMISSIONER OF INCOME-TAX.,

TXA/44/2012HC BombayHCBM05003740201110 September 2012Author: S.A. BOBDE,U. V. BAKRE5 pages

AI SummaryRemanded

What did the High Court hold?

The High Court found substance in the assessee's argument that the ITAT's order was vitiated. The Tribunal had failed to deal with the correctness of the CIT's finding regarding the reduction of deduction. The ITAT had set aside the CIT's favorable finding without substantially considering it, which caused prejudice to the assessee. Citing the observations in the case of Commissioner of Income Tax, Bombay V/s Ganesh Builders, the High Court held that appellate authorities should provide all findings of fact when alternative arguments are possible, rather than disposing of matters solely on a point of law, to facilitate final disposal by the High Court. Consequently, the ITAT's order was set aside, and the matter was remanded back to the ITAT for fresh consideration on all points in accordance with the law. The issue regarding reassessment proceedings was implicitly included in the remand.

What were the facts?

The appellant, New Era Shipping Ltd., is challenging an order of the Income Tax Appellate Tribunal (ITAT) dated July 19, 2011. The ITAT had set aside a decision of the Commissioner of Income Tax (CIT) concerning the partial denial of deduction under Section 33AC of the Income Tax Act, 1961. The CIT had previously ruled in favor of the assessee regarding the reduction of deduction, stating that the assessee being a private company for 78 days was not a correct legal basis for reduction. The ITAT, however, remanded the issue to the CIT without assigning specific reasons and without deciding the correctness of the CIT's finding. The assessee also raised a pure question of law regarding the legality of reassessment proceedings.

What were the issues?

1. Whether the Tribunal was right in law in summarily setting aside the decision of the Commissioner with respect to the issue of partial denial of deduction under Section 33AC of the Act and in remanding the same to the file of the Commissioner without assigning any reason therefor and ignoring the decision of the Jurisdictional High Court in the case of CIT Vs. Ganesh Builders? 2. Whether the Tribunal was right in law in not deciding the pure question of law with respect to legality of the reassessment proceedings urged before it under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 instead of remanding the same back to the file of the Commissioner? Assessee's Contentions: The assessee argued that the ITAT's order was vitiated because it failed to address the correctness of the CIT's finding that the reduction of deduction based on the assessee being a private company for 78 days was incorrect. The ITAT allegedly set aside the favorable finding of the CIT without deciding its validity. The assessee relied on the decision in CIT Vs. Ganesh Builders. Revenue's Contentions: The judgment does not record specific contentions from the revenue regarding these issues.

Which sections of the Income-tax Act were involved?

Section 33AC

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

:1: IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 44 OF 2012 New Era Shipping Ltd., F-2, 1st Floor, Dr. Mukund Bldg., F. L. Gomes Road, Vasco-da-Gama, Goa 403 802. … Appellant V e r s u s The Assistant Commissioner of Income – Tax, Circle 2, Margao Goa. … Respondent Mr. R. G. Ramani, Advocate for the appellant. Ms. Asha Desai, Advocate for the respondent. CORAM : S. A. BOBDE & U.V. BAKRE, JJ. DATE :10 th SEPTEMBER, 2012

ORAL JUDGMENT ( Per S. A. BOBDE, J )

Heard Shri R. G. Ramani, learned Counsel appearing for the appellant and Ms. Asha Desai, learned Counsel appearing for the respondent.

Admit on the following substantial questions of law :

:2: (a) ( 116 ITR 911) ? (b) Whether the Tribunal was right in law in not deciding the pure question of law with respect to legality of the reassessment proceedings urged before it under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 instead of remanding the same back to the file of the Commissioner ?

Ms. Asha Desai, learned Counsel waives service on behalf of the respondent.

Taken up for final hearing by consent.

:3:

The main submission of Shri Ramani, learned Counsel for the appellant is that the order of the ITAT dated 19.07.2011 is vitiated in that the ITAT has failed to deal with the correctness or otherwise of the finding of the CIT dated 22.09.2009 holding that the reduction of the deduction made in the appellant's assessment on the ground that the appellant was a private company for 78 days was not correct in law. According to Shri Ramani, the ITAT has set aside the finding in the appellant's favour given by the CIT on the question of reduction of the deduction without deciding whether it is correctly rendered or not. Having considered the matter, we find substance in the ground raised by Shri Ramani, who has also relied on the decision of this Court ( Per Deshmukh, J) in the case of Commissioner of Income Tax, Bombay V/s Ganesh Builders, where this Court has observed as follows : “We may incidentally observe that in a case like the present one, where alternative arguments on facts are possible and varying findings can be given, it is desirable that the appellate authority gives all findings of fact and not dispose of the matter merely on a :4: point of law. This would facilitate final disposal of the matter by the High Court, whose jurisdiction is limited merely to the question of law by the added Chap. XX-A. This is a normal approach in all civil matters unless of course a point of law is already decided by the highest court of this land and it is not worthwhile making all the exercises in going through the complicated facts required for the decision of this case.......”

We find that the ITAT has dealt with the finding that ITAT which was hearing an appeal from the order of the Assistant Commissioner of the Income Tax has substantially dealt with the ground no.2 referred to in the first para of its order and while deciding the ground no.2 against the appellant has also set aside the finding on the aforesaid question in the appellant's favour without substantially considering the same. This has occasioned serious prejudice to the appellant. Having regard to the observations of this Court in the case of Commissioner of Income Tax,

:5: Bombay V/s Ganesh Builders ( supra ), the order in appeal of the ITAT is hereby set aside and the matter is remanded back to the ITAT for a fresh consideration on all points before it, in accordance with law. S. A. BOBDE, J U.V. BAKRE, J at*

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