FIBRES AND FABRICS INTERNATIONAL PVT LTD vs. THE COMMISSIONER OF INCOME TAX

Assessee is a Private Limited Company. Under the impugned order, the Appellate Tribunal had in fact allowed the appeals of the assessee though termed it as for statistical purposes, had directed the Assessing Officer to examine the claims put forth by the assessee to reconsider the question of allowing depreciation on goodwill part of the assessee and for such purposes, the Tribunal had directed the Assessing Officer to ignore the earlier direction that had been issued by the Commissioner of Income Tax while revising the assessment order to disallow depreciation on the goodwill part.

It is this part of the assessment orders the Commissioner proposed to revise and the assessee had raised a preliminary objection pointing out that there was no error in the order passed by the Assessing Officer; that without order being erroneous, Commissioner does not assume jurisdiction and therefore, he cannot pass any orders by issuing directions but Commissioner nevertheless proceeded to pass an order that it has jurisdiction to issue directions to the assessee to redo the assessment in a particular manner.

It is aggrieved by this order, the assessee had approached the Tribunal. The Tribunal examined the contention of the assessee and thought it proper to interfere with the direction given by the Commissioner to the Assessing Officer and instead, directed the Assessing

It is against this remand order for the two assessment orders, the present appeals by the assessee. Appearing on behalf of the appellant/assessee, submission of Sri Nageshwar Rao, learned Counsel is that the Tribunal has committed an error in not deciding the question of jurisdiction which has been specifically raised by the assessee in the appeal; that in the first instance, the Commissioner assumed jurisdiction by over looking the objections raised by the assessee that the order was not erroneous and secondly, the question is also concluded by a judgment of the Supreme Court on the issue and therefore, the Tribunal should have allowed the appeal on that ground instead of remanding the matter to the Assessing Officer.

Notice had been issued to the respondent/revenue and the revenue is represented by Mr. K.V. Aravind, learned standing Counsel. Both Counsel for appellant and respondent being present and making submissions, we have heard for disposal though the appeals have come up only for Admission.

Mr. Aravind, learned Standing Counsel appearing on behalf of the respondent/revenue points out that it is only a remand order passed by the Tribunal and the order passed by the Assessing Authority for the subsequent years without assigning reasons is an erroneous order

Mr. Nageshwar Rao, learned Counsel appearing for the appellant places strong reliance on the judgment of the Supreme Court in the case of COMMISSIONER OF INCOME TAX –vs- SMIFS SECURITIES LTD rendered on 22nd August, 2012 in Civil Appeal No. 5961/2012 arising out of SLP (C) No. 35600/2009. Submission placed on this decision is that a goodwill is held as part of the asset within the scope of Section 32 of the Act in that case and therefore, depreciation can be claimed etc.

We notice that the question really does not arise from the order of the Tribunal for the simple reason that the Tribunal has not decided the issue. Question of law arises from the order of the Tribunal only when the question is decided by the Tribunal, one way or the other.

Mr. Nageshwar Rao, learned Counsel appearing on behalf of the petitioner also places reliance on the judgment of this Court in the case of CIT –vs- L.F. D’SILVA

The Tribunal has rightly observed that the Commissioner assumed jurisdiction only on the Assessing Authority having not given reason for the passing of the order and therefore, the Tribunal thought it not necessary to interfere on this ground, more importantly the Tribunal directing the Assessing Officer for re-examining the matter in the light of the existing position of law. In that view of the matter, we do not think that the Tribunal has committed any error at variance with the judgment relied

So far as the jurisdiction is concerned, that was not an issue before the Supreme Court in the case relied on. We find by a judgment of this Court, it has been held that where an Assessing Officer does not assign any reason for passing an order having effect on the revenue in the sense that allowing or disallowing a claim put forth by the assessee and if that is not the correct thing, it can amount to an erroneous order. The Tribunal as well as the Commissioner of Income Tax have placed reliance on the decision of this Court in the case of CIT –vs- INFOSYS TECHNOLOGIES LTD. RENDERED ON 4TH JANUARY, 2012 IN ITA NO. 588/2006 AND OTHER CONNECTED CASE ETC.

Mr. Aravind, learned Standing Counsel for the revenue points out to this decision and submits that an assessment order without assigning reasons is erroneous and prejudice to the interest of revenue if it has resulted in loss of revenue or has resulted in reducing the tax liability of an assessee.

Be that as it may. Now that the direction issued by the Commissioner has been set aside and the Tribunal by setting aside the direction issued by the Commissioner has remanded the matter to the Assessing Officer applying the relevant case law, we do not think any prejudice is caused to the assessee under the impugned order and in fact, as pointed out by the learned Standing Counsel for the revenue, it is an order more in favour of the assessee, it is not necessary for us to go into further aspects in this appeal when such facts had not been decided by the Tribunal itself and therefore, these appeals are dismissed at the admission stage as not raising questions of law