CIT vs. HINDUSTAN TIMES LTD

g-14,23 * IN TIIE HIGH COURT OF DELHI AT NEW DELHI + ITA378/2012 CIT ""' APPellant Through: Mr. Sanjeev Rajpal, Advocate versus HINDUSTAN TIMES LTD ""' Respondent Through: Mr. Ajay Vohra, Ms. Kavita Jha & Mr. Somnath Shukla, Advocates \ + rT{350l20l2 CIT AND ..... APPellant Through: Mr. Sanjeev Rajpal, Advocate 3- versus HINDUSTAN TIMES LTD ""' Respondent Through: Mr. Ajay Vohra, Ms' Kavita Jha & Mr. Somnath Shukla, Advocates CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V.EASWAR ORDER o 04.09.2012 1. The Revenue seems to be aggrieved by the impugned order of the Income Tax Appellate Tribunal ('Tribunal' for short) passed in ITA Nos' 2017, 2966 & 833/Del/2004. The question of law sought to be urged by it is as to the correctness of the Tribunal's view that the Commissioner of Income Tax could not have, in the circumstances of the case, exercised jurisdiction under Section 263 of the Income Tax Act, 1961 (.Act', for short) on the ground that the assessment was effoneous and prejudicial to the interest of the Revenue' Digitally Signed By:AMULYA Signature Not Verified

t 2. The facts of the case in brief for the purpose of this judgment are that the assessee, for the relevant years, was a member of an Association of Persons (AOP) within the meaning of the expression under Section 2(31) deemed to be as such by operation of section 185 of the Act. Its share in the AoP had fluctuated for the assessment years 1996-97 to 2000-01. The AOP carried on two ventures' The share ofthe assessee in respect ofthe two ventures differed for each year; however these shares were determined shares at any point of tirne' The assessments were completed in the present case for the years 1998-99 and 1999-2000 accepting the assessee,s claim that its share in the loss of the AOP should be set off against its other income. Subsequently, the Cornmissioner of Income Tax, in exercise of his power under Section 263, sought to revise the assessment contending that the orders of the Assessing Officer accepting the clairn were erroneous and prejudicial to the interest of the Revenue' 3. The commissioner of Income Tax after issuing a show cause notice finalized the revision proceedings holding, inter alia,that the losses claimed by the assessee i.e., its share of the losses in the AoP claimed to be set off against its otherincome,hadbeenwronglyallowed.Indoingso,theCommissionerof Income Tax relied on sections 67-A as well as 1678. The commissioner of Income Tax relied upon the decision of the Bombay High Court in CIT vs Lalita M. Bhat (lggs) 234 ITR 319. The assessee caried the matter in appeal' The Tribunal by its impugned order reasoned that the Commissioner of Income Tax could not have exercised the power of revision since the question as to the treatment of losses of the AOP in the hands of the assessee was debatable and more than one view is plausible and merely because the AO has adopted one of the plausible views it cannot be said that the assessment was erroneous and prejudicial to the interest of the Revenue. 4. It is contended by Mr. Rajpal on behalf of the Revenue that the Tribunal fell into an effor and did not take into consideration the clear provisions of sections 67-4 and 1678. It was submitted that the use of the expression "income" in Section 86 was highly significant and the further enactment of the second

L proviso to that Section, concluded the maffer in that the Parliament clearly intended that such losses could not be set off against the assessee's other income under various heads. 5. Learned counsel for the respondent/assessee, on the other hand, submitted that the Commissioner of Income Tax clearly fell into error in invoking the jurisdiction under Section 263 ofthe Act. It was emphasized that it is not every mistake or error which is deemed to be prejudicial to the interest of the Revenue that can be revised. If such was the position, it would be open to the Commissioner of Income Tax to revise every third return which is finalized by the Assessing Officer. Necessarily, the jurisdiction has to be exercised in such cases oferrors as are clear and apparent from the record ofproceedings. The counsel for the assessee relied upon the decision of the 'Supr.n.I. Court in Malabar Industrial co. Lttt. vs. cIT (2000) 243 ITR 83 and contended that the errof or mistake should be beyond any debate. In other words, if the process of reasoning to discern the effor or mistake is an elaborate one or the point is debatable or where conflicts of view exist, the issue cannot be said to be erroneous so as to fall in the ambit of Section 263. 6. Learned counsel for the assessee submitted that in any event as to whether losses fell within the expression "income" itself, has been decided by the supreme court in the decisions reported as cIT vs Harprasad & co. P. Ltd. (1975) 99 ITR 118 and cIT vs. J. H. Gotla (1935) 156 ITR 323 and that having regard to the conscious use of the word "loss" in Section 67(2) ofthe Act' The question as to whether the losses are inadmissible per se in the assessee's hands was undoubtedly debatable in the circumstances of this case, as indicated by the following orders passed by different Benches of the Tribunal and taking divergent views:- (r) Mahinelra Hotdings and Finance Ltd. vs. DCIT (2009) 311 ITR (A'T) 0001Bom; (ir) Birla Tyres Vs- Joint CIT (2004) 267 ITR (A'T) 0001 Cal; (i|f; Metro Exports P. Ltd. Vs. DCIT 3 SOT 566 (Munl; (iv) Suttei Industries Ltd. Vs. ACIT (2009) 31 SOT 26 (Del)

t 7. This Court is of the opinion that the Tribunal's reasoning in the impugned judgment cannot be faulted. An overall analysis of the three provisions i.e., Section 674, Section 86 and Section 1678 would reveal that the Parliamentary intention as to the treatment of an assessee's share of losses of the AOP is not as clear as it appeared to the commissioner of Income Tax in the present case' No doubt, the Commissioner of Income Tax relied upon the ruling in Lalita M' Bhat (supra) of the Bombay High Court but as was noticed and repeatedly urged, both before the Commissioner of Income Tax and the Tribunal, that decision was before the amendment to the Act which inserted Section 67-4 with effect from 01.04.1989. Furthermore, it is also a matter of record that different Benches of the Tribunal have taken differing views on the interpretation of the same provisions and the very same question [refered to supra]' 8. In view of the above discussion, this Court is of the opinion that no fault can be found with the impugned order of the Tribunal' Consequently, no substantial question of law arises. The appeals are dismissed. S. RAVINDRA BHAT, J [i\,--*. R.V.EASWAR, J SEPTEMBER 04,2012 mb