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Income Tax Appellate Tribunal, - 3 -
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ITA.427/2018 C/w ITA.426/2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF OCTOBER, 2022 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T G SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 427 OF 2018 C/W INCOME TAX APPEAL NO. 426 OF 2018
BETWEEN:
FLEXTRONICS TECHNOLOGIES (INDIA) PRIVATE LTD. PLOT NO.3, PHASE II, SIPCOT INDUSTRIAL PARK SANDAVELLURE C VILLAGE SRIPERUMBUDUR KANCHEEPURAM DISTRICT TAMIL NADU-602 106 REPRESENTED HEREIN BY ITS SENIOR MANAGER TAX MR.ASHOK SRIDHARAN. …APPELLANT (COMMON IN BOTH CASES) (BY SMT.TANMAYEE RAJKUMAR, ADVOCATE)
AND:
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(1)(2), BMTC BUILDING KORAMANGALA 6TH BLOCK BANGALORE-560 085.
COMMISSIONER OF INCOME-TAX-3 BMTC BUILDING KORAMANGALA 6TH BLOCK BANGALORE-560 085 …RESPONDENTS (COMMON IN BOTH CASES) (BY SRI DILIP M., STANDING COUNSEL FOR SRI K.V.ARAVIND, STANDING COUNSEL)
THESE ITAs ARE FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 17/01/2018 AND 21/06/2017 PASSED IN MP NO. 228/BANG/2017 IN IT(TP)A
Digitally signed by MALA K N Location: HIGH COURT OF KARNATAKA
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NO.649/BANG/2015 (ANNEXURE-M) AND IT(TP)A NO.649/BANG/2015 RESPECTIVELY, FOR THE ASSESSMENT YEAR 2010-2011, PRAYING THIS HON'BLE COURT TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ETC,.
THESE ITAs COMING ON FOR HEARING THIS DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal by the assessee is directed against order dated January 17, 2018 in Misc.Petition No.228/Bang/2017 passed by the ITAT1, Bengaluru.
This appeal has been admitted to consider five questions raised by assessee. After hearing the learned Advocate for the assessee and the learned Standing Counsel for the Revenue, in our view, the following three questions arise for consideration:
(a) Whether the Tribunal was justified in declining to rectify the error in its earlier order dated 21.06.2017 (Annexure-K) holding that the Appellant had not raised an objection with regard to working capital adjustment before the lower authorities, despite the same being clearly a mistake apparent
1 Income Tax Appellate Tribunal
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ITA.427/2018 C/w ITA.426/2018
on the record warranting rectification in terms of Section 254(2) of the Act?
(b) Whether the Tribunal was justified in rejecting the application filed by it under Section 254(2) of the Act, holding that the Appellant ought to have filed a separate appeal before the Tribunal against the order rejecting the rectification application filed by the Appellant before the DRP, when in terms of Section 253 of the Act, no appeal lies to the Tribunal against the directions of the DRP or any order passed by it?
(c) Whether the Tribunal was justified in not adjudicating the Appellant's grounds as to the set off of loss of the SEZ unit against the profits of the SEZ developer unit and the domestic unit, despite specific grounds being raised to that effect?
Brief facts of the case are, assessee challenged the order dated June 21, 2017 passed in IT(TP)A No.649/Bang/2015 and connected case in the instant Miscellaneous Petition and the same has been dismissed. Hence, this appeal.
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ITA.427/2018 C/w ITA.426/2018
Ms.Tanmayee Rajkumar, learned Advocate for the assessee submitted that ITAT has dismissed the Miscellaneous Petition with regard to the working capital adjustment on the ground that the assessee had invoked Section 154 of the Income Tax Act, 1961 ('the Act' for short) by filing a miscellaneous petition before the Dispute Resolution Panel ('DRP' for short). According to the ITAT, right course after dismissal of miscellaneous petition before the DRP was to file a separate appeal before ITAT. She submitted that there is no provision to challenge dismissal of a petition under Section 154 of the Act. Therefore, the finding recorded by ITAT is perverse.
Sri.Dilip M., learned Standing Counsel for the Revenue submitted that Section 253(1)(d) of the Act makes it clear that an appeal is maintainable against an order passed under Section 154 of the Act.
The relevant provision reads as follows:
"Sec.253 Appeals to the Appellate Tribunal. -(1): Any assessee aggrieved by any of
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ITA.427/2018 C/w ITA.426/2018
the following orders may appeal to the Appellate Tribunal against such order -
(a) xxxxxxxxxxx
(b) xxxxxxxxxxx
(c) xxxxxxxxxxx
(d) an order passed by an Assessing Officer under
sub-section (3), of section 143 or section 147 (or section 153A or section 153C) in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order;
(e) xxxxxxxxxxx
(f) xxxxxxxxxxx"
Ms.Tanmayee's contention is, only where an order passed by the Assessing Officer under Section 143(3) or Section 147 of the Act is in pursuance of the direction issued by the DRP or an order passed under Section 154 of the Act in respect of such order, it is appealable.
A careful reading of the above provision persuades us to accept the argument advanced on behalf of the assessee in view of unambiguous language employed in
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the statute. Therefore, in our opinion, the view taken by the ITAT that a separate appeal ought to have been filed against dismissal of Miscellaneous Petition under Section 154 of the Act, is erroneous.
Ms.Tanmayee next contended that the ITAT has come to an incorrect conclusion that ground No.9 was not raised in the appeal. She has taken us through the grounds of appeal filed before the ITAT at page-203 of the paper book and pointed out that the specific ground was raised in Paras-9 to 9.5. Therefore, the second ground on which the miscellaneous petition is filed is also perverse and not sustainable.
In view of the above, we pass the following;
ORDER
(a) I.T.A.No.427/2018 is allowed;
(b) Misc.Petition No.228/Bang/2017 passed by the ITAT, Bengaluru, is allowed and ITAT shall hear the main
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appeal so far as the said two grounds viz., working capital adjustment and ground No.9 to 9.5 with regard to computation of the income before adjusting the loss pertaining to SEZ unit, afresh and pass appropriate orders in accordance with law.
(c) Accordingly, the questions of law are answered in favour of the assessee and against the revenue.
(d) Consequently, I.T.A.No.426/2018 is rendered academic and accordingly stands dismissed.
No costs.
Sd/- JUDGE
Sd/- JUDGE
KNM List No.: 1 Sl No.: 39