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The High Court held that the ITAT had failed to exercise its jurisdiction vested in it by Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, by not considering the assessee's application for leave to produce additional evidence. The Court reasoned that the ITAT has the power to permit the production of additional evidence if a case is made out, and it is duty-bound to consider such applications. The failure to consider the application amounted to a failure to exercise jurisdiction. Therefore, the substantial question of law framed regarding the consideration of additional evidence was answered in favour of the appellant. Consequently, the impugned judgment and order of the ITAT were set aside, and the matter was remanded to the ITAT for fresh adjudication. The ITAT was directed to consider the assessee's application for leave to produce additional documents in accordance with law and on its own merits. All contentions of both parties were kept open, and the ITAT was directed to afford an opportunity of hearing to both parties before deciding the appeal. The Court did not go into the merits of the main matter or the application for additional evidence at this stage.
The High Court held that the order dated 08.05.2015 was unequivocally a consent order, as evidenced by the applicant's offer to secure the Revenue with a bank guarantee and the Revenue's counsel stating no objection on instructions. The Court found no basis to vary a consent order based on a unilateral plea. The applicant's cited varied circumstances were not considered substantial enough to warrant variation. The disposal of other writ petitions was noted, but the Court highlighted that WP No. 233/2015, which dealt with assessment year 2008-09 and was related to the bank guarantee amount, was de-tagged due to additional issues and was listed for final hearing. The CBDT circulars were deemed applicable at the appeal stage, not for lifting attachments based on a consent order. Therefore, the application to vary the consent order and release the bank guarantee was dismissed.
The High Court held that the Assessee was not merely a contractor. The agreements with the owners stipulated that the Assessee would be allotted premises in the projects, which it had the liberty to sell to third parties. This indicated a sale of area rather than an engagement of a contractor. The concurrent findings of fact by the CIT(Appeals) and ITAT, that the transaction was a sale of area and not a contractor-contractee relationship, were not vitiated by perversity or misreading of documents. Therefore, Section 194C of the Income Tax Act, which deals with TDS on payments to contractors, was not attracted. Consequently, the disallowance under Section 40(a)(ia) was also not applicable. Both substantial questions of law were answered against the Revenue and in favour of the Assessee. The appeal was dismissed.
The High Court quashed and set aside the notice dated 18.10.2006 under Section 148 and the order dated 31.01.2007. The Court reasoned that the Assessing Officer cannot reopen an assessment under Section 147/148 if there is no valid reason to believe that income has escaped assessment. In this case, the amount of ₹10.33 Crores had been the subject of a block assessment (though later set aside) and was also considered during the regular assessment for AY 2002-03 under Section 143(3) after the petitioners furnished the required information. The Court found that the principle in Commissioner of Income Tax vs. T.V. Sundaram Iyengar & Sons Ltd. was not attracted because the contracts expired well within the limitation period for recovery by the opposite parties, and the petitioners had consistently treated the amount as a liability. The Court also noted that the Revenue's appeal against the Commissioner (Appeals)'s order was dismissed by the ITAT. The Court concluded that in these circumstances, it could not be held that the income had escaped assessment, and the issuance of the notice was in excess of jurisdiction. The Rule in the petition was made absolute.
The High Court held that the observations made by the Commissioner (Appeals) and the ITAT regarding the applicability of Explanation (3) to Section 18 of the Wealth Tax Act were prima facie in nature. This was evident from the fact that both authorities had remanded the matter to the Wealth Tax Officer for re-examination after providing an adequate opportunity of being heard to the appellant. The ITAT had also noted that the issues raised required investigation of facts. Therefore, the High Court found no reason to interfere with the impugned orders and revoke the remand order. The Wealth Tax Officer was directed to investigate the factual aspects, including whether the period of limitation prescribed under Section 17 of the Wealth Tax Act was attracted in light of Explanation (3) to Section 18. The Court noted that the issue of whether Explanation (3) is attracted is a mixed question of law and fact. The substantial questions of law could not be answered in favour of the appellant at this stage.
The High Court held that the Tribunal was correct in allowing the deduction of 90% of income from truck hire, barge hire, ore processing receipts, trans-shipper loader charges, machinery hire charges, and launch hire charges for calculating the profit of the business under Clause (baa) of the Explanation to Section 80HHC for both total income and book profit under Section 115JB. However, the Court clarified that such deduction ought to have been made on the basis of net receipts, not gross receipts, citing the Supreme Court's decision in ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax. The substantial questions of law at (i), (iii), (iv), and (v) were answered accordingly, modifying the impugned orders. Regarding substantial question of law (vi), the Court found it covered by its earlier decision dated March 27, 2012, in the case of Commissioner of Income Tax vs. V. M. Salgaonkar & Brothers Ltd. & anr., where the revenue's appeals were dismissed. Thus, question (vi) was answered in favor of the assessee-appellant, and the impugned orders were modified accordingly. The appeal was disposed of on these terms.
The High Court addressed the substantial questions of law. Regarding issues (ii), (iv), and (v), which concerned the deduction of 90% of income from various hire and processing charges for computing profits under Section 80HHC, the Court held that the revenue was correct in making such deductions. However, it clarified, relying on the Supreme Court's decision in ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax, that these deductions must be made on the basis of net receipts, not gross receipts. The Court noted that the Supreme Court's observation in paragraph 12 of that judgment clearly stated that 90% of the net rent or net interest, which has been included in the profits of business, is to be deducted. Consequently, the Tribunal's order was modified to reflect this, and the revenue was directed to rework the assessment on this basis. For issue (vi), concerning the addition of losses from export of trading goods, the Court held that this issue was entirely decided in favour of the assessee and against the revenue, referencing its own prior decision dated 27.03.2012 in the assessee's own case. The impugned orders were modified accordingly. Issues (i) and (iii) were not pressed by the assessee and thus not adjudicated upon.
The High Court addressed the surviving substantial questions of law. For questions (i) and (iii), concerning the deduction of 90% of income from various hire charges and receipts for Section 80HHC computation, the Court held that the Tribunal was correct in upholding the Assessing Officer's action of deducting 90% of such income. However, the Court modified the impugned orders, stating that such deduction ought to have been made on the basis of net receipts and not gross receipts, citing the Supreme Court's decision in ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax. For question (iv), regarding the addition of losses from export of trading goods to the profit eligible for Section 80HHC deduction, the Court held that this question was entirely covered in favour of the assessee and against the revenue, referencing its own earlier decision dated 27.03.2012 in the case of The Commissioner of Income Tax vs. V. M. Salgaoncar & Brothers Ltd. & anr. The appeals filed by the revenue in that case were dismissed, leading to the substantial question (iv) being answered in favour of the assessee. The appeal was disposed of in terms of these findings.
The High Court disposed of the petition in terms of the statements made by the revenue authorities. The Income Tax authorities (Respondents 1-A and 1-B) and the State Tax Commissioner (Respondent 2) stated that they would issue the necessary certificates or communications to the Collector, Thane, and Tehsildar, Ambernath (Respondents 3 and 4) within a period of four weeks from the date of the hearing. These certificates would reflect the correct state of affairs concerning the dues payable by the Petitioners to the respective authorities under the Income Tax Act and the GST Act. A copy of any such communication addressed to Respondents 3 and 4 would also be forwarded to the Petitioners. The Court did not delve into the merits of the dues themselves, but rather facilitated the procedural step of obtaining the necessary certificates.
The High Court noted the submission of the learned Advocate for the appellants (Revenue) that the Department had instructed her to withdraw the appeals, considering the tax liability. Consequently, the Court held that the appeals stand disposed of as withdrawn. The court fees were directed to be refunded as per rules. No specific findings on the merits of the original dispute or any substantive legal issues were made, as the appeals were withdrawn by the Revenue.
The High Court held that the second substantial question of law concerning the family arrangement and capital gains was required to be answered against the appellant and in favour of the revenue. The Court found that the concurrent findings of fact by the three authorities (AO, CIT(A), and ITAT) suffered from no infirmity. Specifically, the Court noted that the material on record established that Cristovam and Alvaro had no pre-existing right in the immovable property in dispute. Therefore, the settlement arrived at between the appellants and these individuals could not be considered a bonafide family settlement or arrangement as understood in established precedents like *Kale and others*. The Court distinguished cases where family settlements involved the realignment of pre-existing rights, stating that in this case, the settlement was merely an enforceable inter-party arrangement incorporated in consent terms, not a genuine family settlement. The Court also referred to its own decision in *B.A. Mohota Textiles Traders (P.) Ltd.* which held that a family settlement requiring a company to transfer shares would attract capital gains tax. Consequently, the consideration received did not escape capital gains tax. The Court did not explicitly address the first substantial question of law regarding limitation in the provided excerpt, but the dismissal of the appeal implies it was also decided against the appellant.
The High Court, after noting the delay in the proceedings and the parties' failure to ascertain the status of the Full Bench reference, obtained the Full Bench's judgment dated October 16, 2009, in Income Tax Appeal No.1282/2007. The Full Bench held that there was no conflict between the decisions in Grasim Industries Limited and Indian Rayon Corporation Ltd. (which was followed in Scoop Industries Pvt. Ltd.). The Full Bench found that the ratio in both cases was in consonance with the Apex Court's decision in Distributors (Baroda) P. Ltd. vs. Union of India. The Full Bench concluded that for the purposes of deduction under Chapter VIA, the gross total income must be computed by deducting allowable deductions under Sections 30 to 43D, including depreciation under Section 32, even if the assessee had disclaimed current depreciation while computing total income under Chapter IV. The High Court found this Full Bench decision to be a complete answer to the second substantial question of law. Since the ITAT had followed Scoop Industries Pvt. Ltd., and the Full Bench clarified there was no conflict, the substantial question of law was answered against the appellant and in favour of the revenue.
The High Court held that the substantial questions of law were required to be answered against the appellant and in favour of the Revenue. Regarding the first question, the Court found that the material on record established that the appellant undertook manufacture involving value addition, and the product sold was different from the inputs procured, thus distinguishing it from 'CIT Vs. Hindustan Antibiotics Ltd.' where trial production was not for sale. The Court also noted the appellant's shifting stances on the commencement date of manufacture. For the second question, the Court affirmed the ITAT's finding that manufacturing commenced in AY 2002-03, finding no perversity in this factual finding. The third question was also answered against the appellant, as the material indicated manufacture and not mere testing or trial runs. The Court emphasized that appeals under Section 260A are to be decided on substantial questions of law, and the appellant failed to establish perversity in the findings of fact recorded by the AO and ITAT, which were supported by material on record.
The High Court held that the appeal should be disposed of as withdrawn. The reasoning provided was that the learned counsel for the appellant (revenue) stated that she was instructed to withdraw the appeal because the tax effect in the appeal was below Rs. 100 lakhs. Consequently, the appeal was disposed of as withdrawn. The operative direction was to refund the court fees as per rules. No issues were expressly left undecided, as the appeal was withdrawn before any decision on the merits.
The High Court accepted the submission made by the learned counsel for the appellant. The appeal was disposed of as withdrawn. The court directed that the court fees be refunded as per rules. No findings were made on the substantive issues of the appeal, as it was withdrawn before any adjudication on the merits. The ratio decidendi, therefore, pertains to the procedural aspect of withdrawing an appeal due to low tax effect.
The High Court accepted the appellant's request to withdraw the appeal. The Court held that the appeal should be disposed of as withdrawn. The reasoning was based on the appellant's instruction due to the low tax effect. The operative direction was to dispose of the appeal as withdrawn and refund the court fees as per rules. No issues were expressly left undecided as the appeal was withdrawn.
The High Court held that the appeal was admitted only on the substantial question of law concerning the expenditure incurred by the assessee for the construction of the Usgao bridge. The Court noted that this issue was concluded against the Revenue and in favour of the Assessee by a previous judgment dated 9th July, 2019, in Tax Appeal No.4 of 2018. In that judgment, the Division Bench had held that the contribution towards the bridge facilitated the business, enabling it to be carried on more efficiently or profitably, without affecting the Assessee's fixed capital, thus clearly being on revenue account. Furthermore, the Assessee pointed out that the tax effect was approximately Rs.15,00,000/-, and the latest CBDT Circular (8th August, 2019) stipulated that appeals with a tax effect less than rupees one crore would not be pursued by the Department. Consequently, the appeal was dismissed.
The High Court held that the exercise of powers by the Assessing Officer under Section 241A of the Income Tax Act, 1961, was not justified in the facts of the case. While acknowledging the existence of the power, the Court found that its application was not warranted. The Court was prima facie satisfied with the petitioner's contention that even if all proposed additions were sustained, the substantial loss declared by the assessee (over Rs. 6000 crores) would not be wiped out, thus not resulting in any tax demand. The Court also noted the order passed by the Deputy Commissioner (TDS) under Section 197 permitting 'NIL' rate for deduction of tax at source, which indicated a prima facie belief regarding the petitioner's financial condition. The Court set aside the impugned orders in both petitions and directed the respondents to release the refund along with statutory interest within three weeks. The Court did not expressly leave any issue undecided.
The High Court held that the exercise of powers by the Assessing Officer under Section 241A of the Income Tax Act, 1961, was not justified in the facts of the case. While acknowledging the existence of the power, the Court found that its application was inappropriate. The Court was prima facie satisfied with the petitioner's contention that even if all proposed additions were sustained, the declared loss of over Rs. 6000 crores would not be eliminated, thus not resulting in any tax demand. The Court also considered the prior order under Section 197 of the Act, which allowed for 'NIL' TDS, as indicative of the petitioner's financial position. Consequently, the Court set aside the impugned orders withholding the refund. The respondents were directed to release the refund along with statutory interest within three weeks. The Court did not expressly leave any issue undecided.
The Tribunal allowed the appellant (revenue) to withdraw the Wealth Tax Appeal. The reasoning was based on the appellant's submission of a letter indicating instructions from the Principal Commissioner of Income Tax to withdraw the matter, in accordance with CBDT Circular No. 05/2019. The appeal was disposed of as withdrawn. The court also directed the refund of court fees as per rules. No specific issue regarding the merits of the wealth tax assessment was decided, as the appeal was withdrawn before any substantive adjudication.
The High Court held that the adjustment of the refund for AY 2016-17 against the demand for AY 2013-14 was illegal due to the lack of prior written intimation to the Petitioner, which is a mandatory requirement under Section 245 of the Income Tax Act. The Court relied on its own decisions in A.N.Shaikh Sixteenth ITO v. Suresh B.Jain and the Delhi High Court's decision in Glaxo Smith Kline Asia (P) Ltd. v. CIT, as well as CBDT Instruction No.1989, which reiterates the necessity of written intimation before adjusting a refund with an outstanding demand. The Court found that the letter dated February 19, 2018, relied upon by the Revenue, did not constitute a valid waiver of the requirement for prior notice for future adjustments, especially given the passage of time and potential for changed circumstances. Consequently, the impugned communication adjusting Rs.58,07,58,796 and the notice dated July 31, 2019, under Section 245 were quashed and set aside. The Deputy Commissioner was granted liberty to issue a fresh notice under Section 245. Other arguments were not decided. The Petition was allowed.
The High Court framed an additional substantial question of law: Whether the assessment proceedings initiated under Section 158BC of the Income Tax Act, 1961, without issuing notice under Section 143(2) of the Act, were valid. The Court held that the non-issuance of a notice under Section 143(2) is a jurisdictional defect that is not curable and cannot be dispensed with, even for block assessments under Chapter XIV-B. This is based on the Supreme Court's ruling in *Hotel Blue Moon*. The Court found that the Assessee had raised this issue before the ITAT, but the ITAT failed to decide it, granting relief on other grounds. Since the jurisdictional issue was decided in favour of the Assessee, the Court held that there was no necessity to decide the substantial questions of law originally framed at the time of admission of the appeal. The Court dismissed the appeal, upholding the ITAT's order by answering the additional substantial question of law in favour of the Assessee. The Miscellaneous Civil Application for condonation of delay in filing cross-objections was rendered academic and disposed of accordingly.
The High Court held that the Assistant Commissioner erred in rejecting the rectification application. The Court interpreted Section 154(1A) of the Income Tax Act, 1961, emphasizing that the phrase 'considered and decided' refers to matters that have been finally adjudicated in appeal or revision. It does not create an embargo on the rectification power when an appeal is merely pending. The Court found that the Assistant Commissioner had failed to exercise the jurisdiction vested in him by misinterpreting the provision. The reasoning was that the plain language of the statute did not permit adding or changing words to imply that a pending appeal would restrict rectification powers. Therefore, the impugned order rejecting the rectification application was quashed and set aside. The rectification application was restored to the file of the Assistant Commissioner for disposal on its own merits.
The High Court held that the assumption of jurisdiction by the Assessing Officer for reopening the assessment was ultra vires Section 11 of the Expenditure Tax Act, 1987. The Court found that the AO had purported to assume jurisdiction without first disposing of the assessee's objections to the reasons by passing a speaking order, which is a mandatory procedural requirement. The Court relied on the Supreme Court's decision in GKN Driveshafts (India) Ltd. and its own High Court decisions in Bayer Material Science (P) Ltd. and KSS Petron Private Ltd. These precedents establish that the AO must dispose of objections by a speaking order before proceeding with the assessment. Consequently, the first substantial question of law was answered in favour of the assessee. As a result, the second substantial question of law regarding the computation of chargeable expenditure was not adjudicated. The impugned orders of the AO, Commissioner (Appeals), and ITAT were set aside due to non-compliance with jurisdictional parameters. The second substantial question of law was expressly left undecided.
The High Court held that the substantial question of law regarding the interpretation of Section 3(1) of the Expenditure Tax Act, 1987, must be answered against the appellants and in favour of the Revenue. The Court reasoned that the plain reading of Section 3(1) prior to its amendment did not permit dividing room charges by the number of beds or occupants. The amendment in 2002 was not necessarily to resolve ambiguity but could be for other reasons, and assessing authorities must interpret the law as it stood. The appellants had conceded before the ITAT that the issue was concluded against them by the Himachal Pradesh High Court's decision in HPTDC (supra), and there was no contrary decision. For the additional issue concerning the proviso to Section 4(a), the Court held that the proviso makes specific mention of clause (ii) of sub-section (5) of Section 80-IA of the Income-tax Act, and not clause (iii) of sub-section (4). As approval under clause (ii) was obtained only on 28.7.1994, relevant to AY 1995-96, no exemption could be extended for any assessment year prior to 1995-96. The Court found no error in the ITAT's view and answered the additional substantial question of law against the appellant and in favour of the Revenue. All Tax Appeals and the Writ Petition were dismissed.
The Tribunal held that the substantial question of law regarding the interpretation of Section 3(1) of the Expenditure Tax Act, 1987, is to be answered against the appellants and in favour of the Revenue. The Court reasoned that the plain reading of Section 3(1) prior to its amendment did not allow for the division of room charges by the number of beds or occupants. The subsequent amendment was not necessarily indicative of prior ambiguity but could have been to settle contentions. The appellants had conceded before the ITAT that the issue was concluded against them by the Himachal Pradesh High Court's decision in HPTDC (supra). The Court found no illegality in the assessing authorities relying on this decision in the absence of a contrary ruling from the jurisdictional High Court. For the additional issue concerning the proviso to Section 4(a), the Court held that the proviso specifically refers to clause (ii) of sub-section (5) of Section 80-IA, and not clause (iii) of sub-section (4). Since the approval under clause (ii) was obtained only for Assessment Year 1995-96, no exemption could be granted for any assessment year prior to 1995-96. The Court found no error in the ITAT's view and answered this additional substantial question of law against the appellant and in favour of the Revenue. All Tax Appeals and the Writ Petition were dismissed.
The High Court held that the Assessing Officer (AO) lacked the jurisdiction to reopen the assessment. The Court found that the notice under Section 148 was issued after the expiry of four years from the end of the assessment year. For reopening after four years, Section 147 mandates a failure on the part of the assessee to fully and truly disclose all material facts. The Court observed that the reasons provided by the AO for reopening did not reflect an application of mind to this critical jurisdictional requirement. Furthermore, the Court found that factually, the Petitioner had not failed to fully and truly disclose material facts. The Petitioner had provided extensive details regarding shareholding, share premium, valuation of shares, and future prospects during the original assessment proceedings. The Court concluded that the AO's reasons indicated a change of opinion rather than a genuine belief of escaped income due to non-disclosure. Therefore, both the notice for reopening and the order rejecting objections were quashed and set aside as being without jurisdiction.
The High Court held that the ITAT was justified in upholding the CIT(A)'s order quashing the reopening of assessment. The Court found that the AO had applied his mind and accepted the assessee's return after detailed consideration of material and law during the original assessment and even after replying to the audit objection. The subsequent notice for reassessment was issued based on vague reasons and appeared to be a result of the AO acting under the dictation of the Commissioner of Income Tax, indicating a mere change of opinion. The Court distinguished the case of Larsen and Toubro Limited, stating that it did not assist the Revenue as the present case involved a change of opinion on the same set of facts. The Court also distinguished IPCA Laboratories Ltd., noting that the facts were different. Therefore, substantial questions of law (A) and (B) were answered against the Revenue. Consequently, the Court did not deem it necessary to decide substantial question (C) regarding the eligibility for Section 80HHC deduction, as answering it in favour of the Revenue would not alter the final outcome. The appeal was dismissed.
The Tribunal held that the impugned sale proclamation is barred by limitation under Rule 68B of the Second Schedule to the Income Tax Act, 1961. The reasoning was that the properties were attached in 1997, and the sale proclamation was issued in 2019, which is significantly beyond the three-year period prescribed by Rule 68B from the date of attachment or the order giving rise to the tax dues. The Tribunal distinguished the cases relied upon by the revenue. In Rajiv Bhale, the court dismissed the petition on grounds of the petitioner's conduct and the inconclusiveness of the demand orders. In Sanjay Khetan, the Allahabad High Court declined to exercise discretionary writ jurisdiction due to lack of equity, although it observed that Rule 68B might not be retrospective. The Bombay High Court, however, found that sub-rule (3) of Rule 68B makes the limitation applicable to past instances. The Tribunal also held that the petitioner's consent was not unconditional and that the question of limitation goes to the root of the matter. Consequently, the sale proclamation was quashed, and the attachment over the properties was set aside. The Tribunal did not examine the other grievances of the petitioner, leaving them open for future consideration if needed.
The High Court held that the additional substantial question of law, framed in light of the Supreme Court's decision in Hotel Blue Moon, must be answered against the Revenue and in favour of the Assessee. The Court noted that the Supreme Court in Hotel Blue Moon unequivocally held that the issuance of a notice under Section 143(2) is a mandatory requirement and not a curable procedural irregularity. The Apex Court further clarified that even for assessments under Chapter XIV-B (block period assessment under Section 158BC), the provisions of Sections 142 and 143(2) and (3) are applicable, and no assessment can be made without issuing a notice under Section 143(2). Since it was admitted that no notice under Section 143(2) was issued to the Assessee in the present case, the assessment made stands vitiated. Therefore, the appeal filed by the Revenue was dismissed.
The Special Court held that it does not have the jurisdiction to re-open tax assessments or to direct the Income Tax Authorities to make payments of amounts claimed by the applicants. Relying on the Supreme Court's judgment in Harshad S. Mehta (supra), the Court reiterated that the Special Court cannot sit in appeal over tax assessments and that tax liability must be determined by the appropriate machinery under the relevant tax laws. The Court found that the factual aspects requiring determination in the present applications, such as the correctness of the tax assessment and whether amounts are refundable, cannot be agitated before the Special Court. While the Special Court Act has overriding effect, this does not confer powers to assess tax liability. The only power recognized by the Supreme Court in such cases is the power to scale down the demand, which the present applications do not fall under. Therefore, no relief could be granted in the miscellaneous applications. The applicants were advised to pursue their case before the Income Tax Authorities under the Income Tax Act. The Court dismissed both miscellaneous applications.
The High Court held that the expenditure incurred by the assessee for the construction of the new Usgao bridge was revenue expenditure. The Court reasoned that while the expenditure resulted in an advantage of an enduring nature, it primarily facilitated the assessee's business operations, enabling them to be carried on more efficiently and profitably, without affecting the assessee's fixed capital. This aligns with the Supreme Court's observations in L.H. Sugar Factory and Oil Mills (P) Ltd. vs. CIT, which clarified that not every advantage of an enduring nature constitutes capital expenditure; if it merely facilitates business operations or enables more efficient conduct of business while leaving fixed capital untouched, it is revenue expenditure. The Court distinguished the case from those where a profit-making apparatus or a permanent character right was acquired. The appeal was dismissed as no substantial question of law arose.
The High Court held that since the ITAT's order did not decide the controversy regarding the Assessee's eligibility for registration under Section 12A and instead remanded the matter to the CIT (Appeals) for a fresh decision, no substantial question of law arose for the High Court's consideration. The court reasoned that the matter was still open for debate before the CIT (Appeals). Consequently, the Tax Appeal was dismissed, with all rights and contentions of both the Revenue and the Assessee being kept open for future adjudication.
The High Court held that the impugned notice for reassessment was liable to be quashed. The Court found that the Assessing Officer had not prima facie established that income chargeable to tax had escaped assessment. The Court noted that the shares were held for more than 12 months, the sale was through a recognized stock exchange, and STT was paid, making the income exempt under Section 10(38). The Court also observed that the petitioner had accounted for the profit from the sale of shares for the purpose of computing its book profit under Section 115JB of the Act, which was in line with the first proviso to Section 10(38). Relying on the Supreme Court decision in Apollo Tyres Ltd Vs. CIT, the Court held that the AO cannot recompute the profit in the audited accounts for the purpose of book profit. Therefore, the AO's attempt to reopen the assessment was considered a 'fishing or rowing inquiry'. The petition was allowed.
The High Court held that the appeals do not involve any substantial question of law and therefore do not merit admission. The Tribunal's observation that the penalty notices were not issued for any specific charge under Section 271(1)(c) was noted. The Court referred to the Karnataka High Court's decision in CIT vs. SSA's Emerald Meadows, which held that penalty proceedings under Section 271(1)(c) read with Section 274 require the notice to specify the limb of Section 271(1)(c) invoked. This decision was upheld by the Supreme Court. The jurisdictional High Court had also taken a similar view. Consequently, the appeals were dismissed on the grounds that they did not raise a substantial question of law. The operative direction was the dismissal of the appeals.
The High Court quashed the impugned order dated June 20, 2018, passed by the ACIT under Section 197 of the Act. The Court directed the ACIT to issue a certificate of no requirement for deducting tax at source to the petitioner. The Court acknowledged the Revenue's anxiety regarding the recovery of potential tax liabilities from a non-resident assessee, especially in cases of suspected sham transactions. However, it found that the material before the ACIT was insufficient to conclusively demonstrate that the entire transaction was sham or a colorable device. The Court noted that factors like lack of other business activities, administrative expenses, or employee structure, while relevant for assessment, were not by themselves sufficient to reject the Section 197 application at the preliminary stage. The Court balanced equities by directing the release of withheld tax payments subject to stringent conditions. These included the petitioner maintaining a minimum of 50 Lakh shares of ICFL (valued at over Rs. 200 Crores) as security, providing further security if the value dropped below 125% of the released TDS, maintaining these shares until March 31, 2021 (or later if extended), filing a return of income, and submitting an undertaking to abide by these conditions.
The High Court answered the substantial question of law in the affirmative, in favour of the Assessee and against the Revenue. The Court held that the Tribunal's view was contrary to the principles laid down by the Supreme Court in Liberty India and ors. vs. CIT, which established that Sections 80-I, 80-IA, and 80-IB have a common scheme providing incentives linked to profits. The Court found that the Tribunal's distinction between "attributable to" and "derived from" was not applicable in the context of the common scheme of these deduction sections. The Court also distinguished the judgments relied upon by the Revenue, finding them not applicable to the facts of the present case. The Court concluded that the profit arising from the sale of slag, being a by-product generated from the manufacturing process of Pig Iron, is an integral part of the industrial undertaking's business and therefore qualifies for deduction under Section 80-IB. The appeal was disposed of accordingly.
The Tribunal held that the Assessing Officer wrongly exercised powers of rectification under Section 154. It noted that the original assessment orders under Section 143(3) did not invoke Section 115JB, and the issues considered in the normal assessment were pending. The Tribunal further relied on a coordinate bench's decision in the assessee's own case for AY 2006-07, which held that Section 115JB was not applicable to the assessee-bank. The Tribunal concluded that the amendments to Section 115JB by the Finance Act, 2012, were substantive legislative changes applied prospectively and not merely clarificatory. Explanation 3 to Section 115JB(2) provided an option for companies to prepare their profit and loss account either in accordance with the Companies Act or their governing Act, but this was not retrospective. Therefore, Section 115JB, as it stood prior to its amendment by the Finance Act, 2012, was not applicable to a banking company. The Tribunal answered Question 2 in favour of the assessee and against the revenue. Consequently, Question 1 regarding the correctness of the rectification order became unimportant.
The High Court held that Section 115JB, as it stood prior to its amendment by the Finance Act, 2012, was not applicable to a banking company. The Court answered Question No. 2 in favour of the assessee and against the revenue. Consequently, the correctness of the rectification order passed by the Assessing Officer became unimportant, and Question No. 1 was not answered. The Court reasoned that the amendments made by the Finance Act, 2012, were substantive and prospective, and Explanation 3 to Section 115JB(2) was a clarificatory amendment that did not retroactively alter the position. The Court found that the original sub-section (2) of Section 115JB did not offer an option to banking companies to prepare their profit and loss accounts as per their governing Act or as per Section 115JB. Therefore, the ITAT's decision that Section 115JB was not applicable to the banking company was upheld. All appeals were dismissed.
The Tribunal held that Section 115JB, as it stood prior to its amendment by the Finance Act, 2012, was not applicable to a banking company. The reasoning was based on the interpretation of Section 129(1) proviso and Section 115JB(2)(b) of the Companies Act, 2013, and the memorandum explaining the Finance Bill, 2012. The Tribunal found that the amendments made by the Finance Act, 2012, were substantive and prospective, not declaratory or classificatory. Explanation 3 to Section 115JB(2) was considered a clarificatory amendment for removal of doubts, but it did not cure a defect without retrospective amendment, which was not done. The Tribunal answered Question No. 2 in favour of the assessee. Consequently, the correctness of the rectification order (Question No. 1) became unimportant, and it was not answered. All appeals were dismissed.
The High Court held that Section 115JB, as it stood prior to its amendment by the Finance Act, 2012, was not applicable to a banking company. The Court answered Question No. 2 in favour of the assessee and against the revenue. Consequently, the correctness of the rectification order passed by the Assessing Officer became unimportant, and Question No. 1 was not answered. The reasoning was based on the interpretation of the Companies Act, 1956, and the Finance Act, 2012. The Court noted that amendments made by the Finance Act, 2012, were substantive legislative changes, not merely declaratory or classificatory, and were applied prospectively. Explanation 3 below sub-section (2) of Section 115JB, introduced to clarify doubts, provided an option for certain companies to prepare their profit and loss account either in accordance with the Companies Act or the governing Act, but this was not a retrospective amendment. The Court found the provision curious and not a cure for a defect without retrospective amendment. All appeals were dismissed.
The High Court held that Section 115JB, as it stood prior to its amendment by the Finance Act, 2012, was not applicable to a banking company. The Court answered Question No. 2 in favour of the assessee and against the revenue. Consequently, the correctness of the rectification order passed by the Assessing Officer became unimportant, and Question No. 1 was not answered. The Court reasoned that the amendments made by the Finance Act, 2012, including Explanation 3 to sub-section (2) of Section 115JB, were substantive legislative changes and were applied prospectively. These amendments did not retroactively alter the position for assessment years prior to the amendment. The Court found the provision allowing an option to prepare profit and loss accounts in accordance with the governing Act or the Companies Act to be a substantive change, not a mere clarification. Therefore, the ITAT's finding that Section 115JB was not applicable to the assessee-bank was upheld. All appeals were dismissed.
The Tribunal held that Section 115JB, as it stood prior to its amendment by the Finance Act, 2012, would not be applicable to a banking company. The Tribunal answered question No. 2 in favour of the assessee and against the Revenue. Consequently, the correctness of the rectification order passed by the Assessing Officer became unimportant, and question No. 1 was not answered. The reasoning was based on the interpretation of Section 115JB and its proviso, particularly in light of the amendments made by the Finance Act, 2012, and the explanation below sub-section (2). The Tribunal found that the amendments were substantive and applied prospectively, and that the explanation was clarificatory. It also relied on a coordinate bench decision for AY 2006-07 which held Section 115JB not applicable to the assessee-bank. The Tribunal set aside the order passed under Section 154 by the Assessing Officer.