HIMAL ENTERPRISE PVT. LTD., ,SIKKIM vs. ITO, WARD - 3(1), GANGTOK, SIKKIM , SIKKIM

The facts of the case are brought out by the ld. CIT(A) at para 3 of his order. The facts are as follows :- The assessee was registered as a company under the Registration of Companies Act Sikkim 1961. In view of the decision of the Income Tax Appellate Tribunal in Signortron Pvt. Ltd. v Deputy Commissioner of Income Tax Circle 2 Siliguri it has been the contention of the assessee that it is to be assessed in the status of “An association of Persons” for the purposes of assessment under the Income Tax Act 1961. For the assessment year 2013-14 the assessee filed a return in Form ITR in the status of “An association of Persons”. The said return was sent by registered post on September 26, 2013. However, the said return was treated as nonest. As such, the assessee felt compelled to file its return on line and that too by mentioning the status as company. In the assessment made the Assessing Officer treated the assessee as a company and Assessment Year: 2013-14 Himal Enterprise Pvt. Ltd computed book profit of RS.2709521 and tax of Rs.516300 under section 115JB of the Act and disallowed a sum of Rs.138135 under section 14A read with rule 8D.

The issue before me is whether the assessee has to assessed in the status of a ‘Company’ or in the status of “An association of Persons”. We have heard rival contentions. The undisputed facts of the case is that the assessee company is registered as a Private Limited Company under the Registration of Companies Act Sikkim 1961. The definition of ‘Company’ under the Income Tax Act, 1961 is given u/s 2(22A) of the Act. This definition does not include a company registered under the Companies Act of Sikkim, 1961. The Kolkata ‘D’ Bench of the Tribunal in the case of Signotrom (Sikkim) Pvt. Ltd., Sikkim vs. Dy. Commissioner of Income Tax in Assessment Year 2004-05, order dt. 21/09/2007, at para 15 held as follows:- “15. On the other hand, the Ld. D.R. strongly supported the order of the A.O. and that of the CIT(A) while defending the Revenue. As it is evident from the aforesaid argument and counter-argument from the rival parties along with the case record perused, the only issue in this case relates to the issue of status. According to the assessee, the status claimed is AOP whereas the A.O. & CIT(A) treated it as a company on the basis that the Indian Companies Act is also equally applicable to Sikkim. But in view of the position of the Constitution, any company incorporated in Sikkim has its separate status and the same is not equivalent to a company under the Indian Companies Act. Unless and until notification is issued by the Hon’ble President of India, Indian Companies Act cannot extend to Sikkim. At the same time, companies incorporated under the Companies Act (Sikkim), 1961. The specific provision of Article 371F of the Constitution grants a special status to the State of Sikkim. Clause (n) of the said Article provides that any enactment which is force in India may be extended to the Sikkim by the President by public notification. In absence of any such notification extending to the present Act to Sikkim, the State continues to be governed by its own Registration of Companies Act (Sikkim), 1961. Therefore, in view of the peculiar Constitutional barrier to the status of Sikkim, we are to accept the contentions of the Ld. A.R. on behalf of the assessee and accordingly we allow the status as AOP as there was no proper rebuttal from the side of the revenue to the contention taken by the assessee through its Ld. A.R. Accordingly, the appeal of the assessee is allowed.”