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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Principal Commissioner of Income Tax-6, Chennai, dated 18.03.2015 and pertains to assessment year 2010-11.
Sh.R. Rajagopalakrishnan, the Ld. representative for the assessee, submitted that the Assessing Officer allowed deduction under Section 80-IA of the Income-tax Act, 1961 (in short 'the Act') by treating the Container Freight Station as infrastructure facility.
However, the Principal Commissioner found that Container Freight Station could not be treated as infrastructure facility, hence the assessee is not eligible for deduction under Section 80-IA of the Act. The Ld. representative further submitted that the assessee brought to the notice of Principal Commissioner the judgment of Madras High Court in CIT v. Al. Logistics Pvt. Ltd. dated 23.12.2014 and the judgment of Delhi High Court in Container Corporation of India v. ACIT dated 11.05.2012. The Principal Commissioner found that the above said judgments of Delhi High Court and Madras High Court are very much applicable to the facts of the present case.
However, he failed to follow the same only for the reason that an SLP has been filed before the Apex Court. According to the Ld. representative, mere pendency of SLP before Apex Court against the judgment of jurisdictional High Court in the case of Al. Logistics Pvt. Ltd. (supra) cannot be a reason for not following the judgment of the jurisdictional High Court. On a query from Bench what happened to the interest to the extent of `3,18,077/-, the Ld. representative clarified that the interest was received by the assessee from the fixed deposit made with bank and the assessee himself not pressed before the Assessing Officer, therefore, the Assessing Officer denied deduction under Section 80-IA of the Act.
On the contrary, Shri Jayaram Raipura, the Ld. Departmental Representative, submitted that no doubt, the judgment of Delhi High Court in Container Corporation of India (supra) and the judgment of jurisdictional High Court in Al. Logistics Pvt. Ltd. (supra) are in favour of the assessee on identical set of facts. However, the Department has not accepted the judgment of Delhi High Court and the judgment of Madras High Court and an SLP was already filed which is pending before the Apex Court. Therefore, just to keep the matter alive, according to the Ld. D.R., the Principal Commissioner has rightly revised the order of the Assessing Officer in exercise of his power under Section 263 of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the jurisdictional High Court by judgment dated 23.12.2014 in Al.
Logistics Pvt. Ltd. (supra) found that the Container Freight Station is eligible for deduction under Section 80-IA of the Act. This judgment of the jurisdictional High Court was brought to the notice of the Principal Commissioner. The Principal Commissioner found that the Department has already filed an SLP before the Apex Court, therefore, the order of the Assessing Officer can be revised. The Principal Commissioner, in fact, placed his reliance on the judgment of the Apex Court in CIT v. G.M. Mittal Stainless Steel P. Ltd. (2003)
263 ITR 255.
We have carefully gone through the judgment of the Apex Court in G.M. Mittal Stainless Steel P. Ltd. (supra). The Apex Court never said that the Commissioner can proceed against the judgment of the High Court. In fact, the Apex Court observed as follows at page 258 of ITR as follows:-
“………The fact that this court had subsequently reversed the decision of the High Court would not justify the Commissioner in treating the Assessing Officer’s decision as erroneous. The power of the Commissioner under section 263 of the Income-tax Act must be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the Revenue. The satisfaction of the Commissioner, therefore, was based on no material either legal or factual which would have given him the jurisdiction to take action under section 263 of the Income-tax Act.”
This Tribunal is of the considered opinion that the judgment of jurisdictional High Court is binding on the Assessing Officer as well as the Principal Commissioner. Therefore, the Principal Commissioner cannot take a different view other than the one taken by the jurisdictional High Court. Mere pendency of SLP before the Apex Court cannot be a reason to take a different view by the Principal Commissioner. Judicial discipline requires the Principal Commissioner to follow the judgment of jurisdictional High Court. It is open to the Department to file SLP against the judgment of jurisdictional High Court before the Apex Court in a manner known to law. It does not mean that the Principal Commissioner can violate or ignore the judgment of Madras High Court unless and until it is reversed by Apex Court. It is nobody’s case that the judgment of Madras High Court is stayed by the Apex Court. In such circumstances, the exercise of power under Section 263 of the Act by the Principal Commissioner is not justified. Accordingly, the order of the Principal Commissioner is quashed and the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on 1st January, 2016 at Chennai.