THE COMMISSIONER OF INCOMET AX vs. M/S CGI INFORMATION SYSTEMS & MANAGEMENT

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ITA/810/2007HC KarnatakaKAHC01058081200707 February 2014Bench: B.MANOHAR,DILIP B.BHOSALE5 pages
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What did the High Court hold?

The High Court agreed with the Revenue that the substantial questions of law raised in the appeals were squarely covered by its own judgment in Commissioner of Income-tax & Another V/s. Samsung Electronics Co., Ltd. The Court noted that the Assessee's counsel did not dispute this submission. Consequently, the appeals were disposed of in terms of the Samsung Electronics judgment, meaning all questions were answered in favour of the Revenue and against the Assessee. The Assessing Officer was directed to pass consequential orders under Section 260(1A) of the Income Tax Act, 1961, only after the Supreme Court finally disposes of the Special Leave Petition (SLP) arising from the Samsung Electronics judgment. Until then, the Assessing Officer was to keep the matter pending. Liberty was reserved to the Assessee to seek revival of the appeals if the Supreme Court remands the matter. The issue regarding the tax effect below Rs. 10 lakhs was not explicitly decided but implicitly overridden by the decision based on the Samsung Electronics precedent.

What were the facts?

The appeals were filed by the Commissioner of Income-tax and the Income Tax Officer against M/s. CGI Information Systems and Management Consultants Private Ltd. The appeals challenged the orders of the Income Tax Appellate Tribunal (ITAT), Bangalore, which had confirmed the orders of the Appellate Commissioner. The ITAT's orders were dated June 15, 2007, and pertained to assessment years not explicitly stated in the judgment. The appeals were filed under Section 260A of the Income Tax Act, 1961. The Revenue contended that the substantial questions of law were covered by a previous judgment of the High Court in Commissioner of Income-tax & Another V/s. Samsung Electronics Co., Ltd. The Assessee argued for dismissal based on Instruction No. 3/2011 due to a tax effect below Rs. 10 lakhs.

What were the issues?

1. Whether the substantial questions of law raised in the appeals are covered by the High Court's judgment in Commissioner of Income-tax & Another V/s. Samsung Electronics Co., Ltd. (2011)64 DTR Judgments 178, as argued by the Revenue? (Question of law) 2. Whether the appeals deserve to be dismissed on the ground that the tax effect is less than Rs. 10 lakhs, in view of Instruction No. 3/2011 issued under Section 268A of the Income Tax Act, 1961, as argued by the Assessee? Contentions: Assessee: The appeals should be dismissed as the tax effect is less than Rs. 10 lakhs, citing Instruction No. 3/2011 under Section 268A of the Income Tax Act, 1961. Revenue: The substantial questions of law are squarely covered by the High Court's judgment in Commissioner of Income-tax & Another V/s. Samsung Electronics Co., Ltd. (supra).

Which sections of the Income-tax Act were involved?

Section 260A,Section 268A,Section 260(1A)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 7th DAY OF FEBRUARY 2014

PRESENT

THE HON’BLE MR. JUSTICE DILIP B.BHOSALE AND THE HON’BLE MR. JUSTICE B.MANOHAR

I.T.A. No.808/2007 C/W. I.T.A. NOS.809/2007 & 810/2007

BETWEEN :

1.

The Commissioner of Income-tax, Central Circle, C.R.Building, Queens Road, Bangalore.

2.

The Income Tax Officer, International Taxation, Ward – 19(1), Bangalore. …APPELLANTS (Common in all)

(By Sri.K.V.Aravind, Adv.)

AND :

M/s.CGI Information Systems And Management Consultants Private Ltd., No.38,

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Naganathapura, Electronics City Post, Bangalore – 68. …RESPONDENT (Common in all)

(By Sri.K.S.Ramabhadran, Adv.) . . . .

These I.T.As. are filed under Section 260A of the Income Tax Act, 1961 praying to (i) formulate the substantial questions of law stated therein, (ii) allow the appeal and set-aside the order passed by the Income Tax Appellate Tribunal, Bangalore in I.T.A. Nos. 982/Bang/2005, 983/BNG/2005 and 441/Bang/2006 respectively dated 15.06.2007 confirming the order of the Appellate Commissioner, Bangalore in the interest of justice and equity.

These I.T.As. coming on for hearing, this day, Dilip B.Bhosale, J., delivered the following:

JUDGMENT

Heard the learned counsel appearing for the parties.

2.

Mr.K.V.Aravind, learned counsel appearing for appellant states that the substantial questions of law raised in these appeals are squarely covered by the judgment of this Court in Commissioner of Income Tax & Another V/s. Samsung Electronics Co., Ltd.

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And others (2011)64 DTR Judgments 178. He further submits that the judgment of this Court in Samsung Electronics (supra) is carried by the assessee therein to the Supreme Court and the SLP is now pending for admission.

3.

There is no dispute that the Supreme Court has not passed any interim order in the SLP. Our attention was invited to another SLP bearing (Civil) No.396/2012 filed by M/s. IBM India Ltd., wherein the questions raised are similar. The Supreme Court has already granted leave in this SLP, but has specifically mentioned in the order “No stay”.

4.

Mr. K.S.Ramabhadran, learned counsel for the respondent-assessee submits that since tax effect in these three appeals is less than Rs.10 lakhs, the appeals deserve to be dismissed in view of Instruction No.3/2011 issued under Section 268A of the Income Tax Act, 1961.

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5.

Having confronted with this, Mr.Aravind after taking us through the questions raised in these appeals submitted that they deserve to be answered in favour of the Revenue in view of the judgment of this Court in Samsung Electronics. We do find ourselves in agreement with Mr.Aravind. As a matter of fact, the learned counsel appearing for the assessee also has not disputed the submission made by Mr.Aravind.

6.

Since it is not in dispute that all the questions raised in the present appeals are squarely covered by the judgment of this Court in Samsung Electronics, we dispose of these appeals also in terms of the said judgment. In other words, in Samsung Electronics, all the questions, as raised in the instant appeals, stand answered in favour of the revenue and against the assessee. We direct the Assessing Officer to pass consequential orders as contemplated under Section 260(1A) of the Income Tax Act, 1961 after the Supreme Court finally dispose of the SLP (Civil appeal) arising from the judgment of this Court in Samsung

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Electronics. In other words, till then, the Assessing Officer shall keep the matter pending for passing consequential orders. However, liberty is reserved to the respondent-assessee to seek revival of these appeals in the event, the Supreme Court remands the matter.

Appeals are disposed of accordingly.

Sd/- JUDGE

Sd/- JUDGE

SPS

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