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538 orders · Page 8 of 11
The High Court, acknowledging that the issue was squarely covered by its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)], was bound to follow it. Consequently, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings or orders. The Court granted liberty to the Revenue to revive the Writ Petition if the Supreme Court were to set aside the Hexaware Technologies Ltd. judgment on this specific issue. The Court clarified that revival could be sought by filing a Praecipe, and upon revival, the Petition would be decided on its merits, considering other grounds raised. The ratio decidendi is that a High Court is bound by its own Division Bench judgments unless stayed or overruled, and a procedural defect in the issuance of a Section 148 notice, if contrary to established law, warrants quashing.
The High Court held that it was bound to follow the Division Bench decision of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)], as the present case was squarely covered by it. Consequently, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings or orders. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon'ble Supreme Court. The Court clarified that revival could be done by filing a Praecipe, and upon revival, the Petition would be decided on its merits, considering other raised issues. The Rule was made absolute, and the Writ Petition was disposed of.
The High Court held that it is bound to follow the decision of the Division Bench of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, as the present case is squarely covered by it. Consequently, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders. The Court granted liberty to the Revenue to revive the writ petition if the decision in Hexaware Technologies Ltd. is set aside by the Supreme Court. The Court clarified that revival can be done by moving a Praecipe, and once revived, the petition would be decided on its merits, considering other issues raised. The Rule was made absolute, and the Writ Petition was disposed of.
The High Court dismissed the appeal. Regarding issues 6.1, 6.2, and 6.3 concerning the validity of the search warrant and assessment on a dissolved entity, the Court stated these were not decided and would be addressed in an appropriate case. Regarding issue 6.4 and the inclusion of flower beds in BUA, the Court agreed with the CIT(A) and ITAT that flower beds below floor level are not part of the BUA as defined in Section 80IB(14)(a). The Court found no error in the ITAT's reliance on Commonwealth Developers for this aspect. Regarding issues 6.7 and the inclusion of service area, window area, window projections, and cupboard projections in BUA, the Court upheld the CIT(A)'s and ITAT's findings. It reasoned that cupboard projections are part of wall area, service areas are common areas not usable by flat owners, and window projections are unsafe elevational features not part of the carpet area. Therefore, these were correctly excluded from BUA for calculating the 1000 sq.ft. limit for Section 80IB(10) deduction. The Court found that issue 6.7 did not give rise to a substantial question of law. Issue 6.8 was not considered as it pertained to a different assessment year.
The High Court held that the Assessing Officer erred in invoking clause (c) of Explanation to Section 115JA, as a provision for doubtful debts/advances relates to a diminution in the value of an asset (receivable) and not a liability. The Court further held that the CIT(A) and ITAT erred in treating the provision as a 'reserve' under clause (b). The reasoning was that while clause 7(2) of Schedule VI of the Companies Act was considered, the subsequent introduction of clause (g) to Explanation to Section 115JA (with effect from April 1, 1998) specifically addressed amounts set aside as provision for diminution in the value of any asset. If such amounts were already covered under clause (b) as reserves, the legislature would not have found it necessary to introduce a separate clause (g). The Court noted that for the assessment year 1997-1998, clause (g) was absent, and such provisions for diminution in asset value were not covered by clause (b). Therefore, the addition of Rs.2,49,73,218/- to the book profit was set aside. The substantial question of law was answered in the negative.
The High Court held that the insurance claims received by the assessee for the death of the mares were capital receipts and not taxable under Section 41(1) of the Income Tax Act, 1961. The Court reasoned that Section 41(1) applies to the cessation of trading liability or trading profit, and not to receipts arising from the destruction of capital assets. The Court noted that the horses were treated as capital assets by the Revenue, and therefore, any income arising from them should be considered under the head 'Capital Gains'. The Court also observed that the Revenue's contention that the deduction under Section 36(1)(vi) was claimed for these specific horses was unfounded, as deductions were allowed for horses where no insurance claims were received. The Court further pointed out that Section 45(1A), which specifically deals with insurance claims on destruction of capital assets, was introduced later and was not applicable to the assessment years in question. The Court concluded that the orders of the Assessing Officer, CIT(A), and ITAT were set aside to the extent they brought the insurance claim amount to taxation. The Revenue was directed to treat the entire amounts of insurance claims as capital receipts governed by Section 45(1) of the Act. The issue of applicability of Section 45(1A) to livestock destruction due to death was left open.
The High Court held that the insurance claims received on the death of the mares could not be taxed under Section 41(1) of the Income Tax Act, 1961. The Court reasoned that the horses were treated as capital assets by the revenue. Therefore, any receipt arising from their destruction, such as an insurance claim, should be considered a capital receipt and would only be taxable under Section 45 of the Act as capital gains, if applicable. The Court found the revenue's argument that Section 41(1) applied to be unfounded, particularly because no deduction under Section 36(1)(vi) was allowable for the specific horses for which insurance claims were received. The Court noted that the capital cost in the books of accounts was replaced by the insurance claim amount, and there was no question of seeking a deduction in income under Section 36(1)(vi). The Court also referred to the introduction of Section 45(1A) by the Finance Act, 1999, which specifically deals with insurance claims on the destruction of capital assets, and noted that this provision was not applicable to the assessment years in question. The Court set aside the orders of the AO, CIT(A), and ITAT to the extent they brought the insurance claim amounts to taxation and directed that the entire amounts be treated as capital receipts governed by Section 45(1) of the Act.
The High Court held that the insurance claims received by the assessee for the death of the mares were capital receipts and not taxable under Section 41(1) of the Income Tax Act, 1961. The Court reasoned that Section 41(1) applies to the cessation of trading liability or trading profit, and not to receipts arising from the destruction of capital assets. The Court noted that the horses were treated as capital assets by the Revenue, and therefore, any income arising from them should be considered under the head 'Capital Gains'. The Court also observed that the Revenue's contention that the deduction under Section 36(1)(vi) was claimed for these specific horses was unfounded, as deductions were allowed for horses where no insurance claims were received. The Court further pointed out that Section 45(1A), which specifically deals with insurance claims on destruction of capital assets, was introduced later and was not applicable to the assessment years in question. The Court concluded that the orders of the Assessing Officer, CIT(A), and ITAT were set aside to the extent they brought the insurance claim amount to taxation. The Revenue was directed to treat the entire amounts of insurance claims as capital receipts governed by Section 45(1) of the Act. The issue of applicability of Section 45(1A) to livestock destruction due to death was left open.
The High Court held that the insurance claims received by the assessee for the death of the mares were capital receipts and not taxable under Section 41(1) of the Income Tax Act, 1961. The Court reasoned that Section 41(1) applies to the cessation of trading liability or trading profit, and not to receipts arising from the destruction of capital assets. The Court noted that the horses were treated as capital assets by the Revenue, and therefore, any income arising from them should be considered under the head 'Capital Gains'. The Court also observed that the Revenue's contention that the deduction under Section 36(1)(vi) was claimed for these specific horses was unfounded, as deductions were allowed for horses where no insurance claims were received. The Court further pointed out that Section 45(1A), which specifically deals with insurance claims on destruction of capital assets, was introduced later and was not applicable to the assessment years in question. The Court concluded that the orders of the Assessing Officer, CIT(A), and ITAT were set aside to the extent they brought the insurance claim amount to taxation. The Revenue was directed to treat the entire amounts of insurance claims as capital receipts governed by Section 45(1) of the Act. The issue of applicability of Section 45(1A) to livestock destruction due to death was left open.
The High Court held that the Writ Petition deserved to be allowed. It agreed with the assessee that a subsequent ruling of the Supreme Court cannot be a ground for invoking Section 254(2) of the IT Act. Section 254(2) is for rectifying mistakes apparent from the record, not for applying subsequent changes in law. On the date the ITAT passed its original order on June 22, 2022, it followed the law as it stood then, and there was no error apparent on the record. The Court relied on its own Division Bench decision in Infantry Security and Facilities v. The Income Tax Officer and the Supreme Court's decision in Beghar Foundation, which held that a change in law or a subsequent judgment by itself cannot be a ground for review or rectification. Therefore, the ITAT committed a patent error in exercising jurisdiction under Section 254(2). The impugned orders dated August 4, 2023, and October 26, 2023, were quashed and set aside, restoring the ITAT's original order dated June 22, 2022. The Revenue was not precluded from challenging the original order under Section 260A.
The Tribunal decided to follow the Division Bench decision of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2). The Court found that the issue raised by the petitioner was squarely covered by this precedent. Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Tribunal granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Supreme Court. The Court clarified that revival could be sought by a Praecipe, and upon revival, the petition would be decided on its merits, considering other raised issues. The Rule was made absolute, and the Writ Petition was disposed of.
The Tribunal, following the Division Bench decision of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), held that the Notice issued under Section 148 of the Income Tax Act, 1961, was invalid due to being issued by a Jurisdictional Assessing Officer instead of a Faceless Assessing Officer. The Court stated it was bound to follow the precedent set in Hexaware Technologies Ltd. Consequently, the impugned Notice and all consequential proceedings and orders were set aside. However, the Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Supreme Court. The Court clarified that upon revival, the Petition would be decided on its merits, considering other raised issues. The Rule was made absolute, and the Writ Petition was disposed of.
The Bombay High Court, following its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), held that the impugned Notice issued under Section 148 of the Income Tax Act, 1961, was liable to be set aside. The Court acknowledged that the Revenue had stated the Hexaware judgment was challenged before the Supreme Court, but as there was no stay, the Court was bound to follow the existing precedent. Accordingly, the Court set aside the impugned Notice and all consequential proceedings and orders. However, liberty was granted to the Revenue to revive the Writ Petition if the Supreme Court were to set aside the decision in Hexaware Technologies Ltd. on this issue. The Court clarified that upon revival, the petition would be decided on its merits, considering other grounds raised. The Rule was made absolute, and the Writ Petition was disposed of.
The Bombay High Court held that the issue raised by the Petitioner was squarely covered by its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)]. The Court stated that it was bound to follow this precedent. Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the Writ Petition if the Supreme Court were to set aside the Hexaware Technologies Ltd. judgment on this specific issue. The Court clarified that revival could be sought by filing a Praecipe, and upon revival, the petition would be decided on its merits, considering other grounds raised. No costs were awarded.
The Bombay High Court, acknowledging that the issue was squarely covered by its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)], held that it was bound to follow this precedent. Consequently, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings or orders. However, the Court granted liberty to the Revenue to revive the Writ Petition if the Supreme Court were to set aside the Hexaware Technologies Ltd. judgment. The Court clarified that revival could be sought by filing a Praecipe, and upon revival, the Petition would be decided on its merits, considering other grounds raised. No costs were awarded.
The Bombay High Court, following its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), held that the impugned Notice issued under Section 148 of the Income Tax Act, 1961, was liable to be set aside. The Court acknowledged that while the Hexaware judgment was under challenge before the Supreme Court, there was no stay in operation. Therefore, the High Court was bound to follow its own precedent. The Court set aside the impugned Notice and all consequential proceedings or orders. However, liberty was granted to the Revenue to revive the writ petition if the Supreme Court were to set aside the Hexaware Technologies Ltd. decision on this issue. The Court clarified that revival could be sought by a Praecipe, and upon revival, the petition would be decided on its merits, considering other raised issues. The Rule was made absolute, and the Writ Petition was disposed of.
The High Court held that since the issue raised by the petitioner was squarely covered by the Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), the court was bound to follow that precedent. Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The court granted liberty to the Revenue to revive the writ petition if the decision in Hexaware Technologies Ltd. is set aside by the Supreme Court. The court clarified that revival could be sought by filing a praecipe, and upon revival, the petition would be decided on its merits, considering other issues raised. The rule was made absolute, and the writ petition was disposed of.
The Bombay High Court, following its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)], set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings or orders. The Court reasoned that it was bound to follow the precedent set by the Hexaware Technologies Ltd. judgment, as there was no stay on its operation. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon'ble Supreme Court. The Court clarified that revival could be sought by filing a Praecipe, and upon revival, the Petition would be decided on its merits, considering other issues raised. No other issues were expressly left undecided, but the Court acknowledged that other grounds challenging the Section 148 Notice existed.
The High Court held that the issue raised by the Petitioner is squarely covered by the Division Bench decision of the same Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)]. As the Court is bound to follow its own precedents, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the writ petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon’ble Supreme Court. The Court clarified that revival could be done by filing a praecipe, and upon revival, the petition would be decided on its merits, considering other issues raised. No order as to costs was made.
The High Court held that the issue raised by the Petitioner is squarely covered by the Division Bench decision of the same Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)]. The Court stated that it is bound to follow this precedent. Consequently, the impugned Notice issued under Section 148 and all consequential proceedings/orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon’ble Supreme Court. The Court clarified that revival can be done by filing a Praecipe, and upon revival, the petition would be decided on its merits, considering other issues raised. No other issues were expressly left undecided.
The Bombay High Court, acknowledging that the issue was squarely covered by its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), held that it was bound to follow that precedent. Consequently, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings or orders emanating therefrom. The Court granted liberty to the Revenue to revive the writ petition if the Supreme Court were to set aside the decision in Hexaware Technologies Ltd. on this specific issue. The Court clarified that the Revenue could revive the petition by filing a praecipe, without needing a separate interim application. It was also made clear that upon revival, the petition would be decided on its merits, considering other grounds raised by the petitioner.
The High Court held that the issue raised by the petitioner was squarely covered by the Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2). Consequently, the Court was bound to follow this precedent. Accordingly, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the writ petition in the event the Supreme Court sets aside the decision in Hexaware Technologies Ltd. on this specific issue. The Revenue can revive the petition by filing a Praecipe, without needing a separate interim application. The Court clarified that if revived, the petition would be decided on its merits, considering other grounds raised by the petitioner.
The High Court held that it was bound to follow the decision of its own Division Bench in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2). Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon'ble Supreme Court on this issue. The Court clarified that revival could be sought by a Praecipe, and upon revival, the petition would be decided on its merits, considering other issues raised. The Rule was made absolute, and the Writ Petition was disposed of accordingly, with no order as to costs.
The Tribunal, bound by the Division Bench decision of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings. The Court reasoned that once an issue is squarely covered by a binding precedent, it must be followed. However, to accommodate the Revenue's submission regarding the pending Supreme Court challenge, the Court granted liberty to the Revenue to revive the Writ Petition if the Hexaware Technologies Ltd. decision is set aside by the Supreme Court. The Court clarified that revival could be sought via a Praecipe, and upon revival, the Petition would be decided on its merits, considering other raised issues. No decision was made on the other issues raised in the petition.
The High Court held that the issue raised by the petitioner is squarely covered by the Division Bench decision in Hexaware Technologies Ltd. (supra). Consequently, the Court was bound to follow this precedent. Accordingly, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. (supra) is set aside by the Hon'ble Supreme Court on this issue. The Court clarified that revival could be done by moving a Praecipe, without a separate interim application. It was also made clear that upon revival, the petition would be decided on its own merits, considering other grounds raised by the petitioner challenging the Section 148 Notice. The Rule was made absolute, and the Writ Petition was disposed of.
The Bombay High Court held that it is bound to follow the decision of its own Division Bench in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2). Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the Writ Petition if the Supreme Court were to set aside the Hexaware Technologies Ltd. judgment on this issue. The Court clarified that revival could be done by filing a Praecipe, and upon revival, the Petition would be decided on its merits, considering other issues raised. The Rule was made absolute, and the Writ Petition was disposed of.
The Bombay High Court, following its own Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2), held that the impugned Notice issued under Section 148 of the Income Tax Act, 1961, was liable to be set aside. The Court reasoned that it is bound to follow the precedent set by the Hexaware Technologies Ltd. judgment, which addressed the issue of the authority issuing the Section 148 Notice. The Court accordingly set aside the impugned Notice and all consequential proceedings or orders. However, to allow the Revenue to pursue the matter further if the Supreme Court overturns the Hexaware Technologies Ltd. decision, the Court granted liberty to the Revenue to revive the Writ Petition. The Court clarified that revival could be done by a Praecipe, and upon revival, the Petition would be decided on its merits, considering other grounds raised by the petitioner.
The High Court held that the issue raised by the Petitioner was squarely covered by the Division Bench decision in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)]. Being bound to follow this precedent, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings or orders. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. is set aside by the Hon'ble Supreme Court. The Court clarified that revival could be sought by filing a Praecipe, and upon revival, the Petition would be decided on its own merits, considering other issues raised. The Rule was made absolute, and the Writ Petition was disposed of.
The High Court held that since the issue raised by the petitioner was squarely covered by the Division Bench decision of the same Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)], the Court was bound to follow it. Consequently, the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all proceedings and orders emanating therefrom were set aside. The Court granted liberty to the Revenue to revive the Writ Petition if the Supreme Court were to set aside the Hexaware Technologies Ltd. judgment on this issue. The Court clarified that revival could be sought by filing a Praecipe, without needing a separate interim application. It was also made clear that upon revival, the Petition would be decided on its own merits, considering other issues raised.
The High Court held that it was bound to follow the decision of the Division Bench of the Bombay High Court in Hexaware Technologies Ltd. V/S Assistant Commissioner of Income-tax, Circle 15(1)(2) [(2024) 162 taxmann.com 225 (Bombay)], as the present case was squarely covered by it. Consequently, the Court set aside the impugned Notice issued under Section 148 of the Income Tax Act, 1961, and all consequential proceedings and orders. The Court granted liberty to the Revenue to revive the Writ Petition if the decision in Hexaware Technologies Ltd. was set aside by the Hon'ble Supreme Court. The Court clarified that revival could be done by moving a Praecipe, and upon revival, the Petition would be decided on its merits, considering other issues raised. No other issue was expressly left undecided.
The High Court allowed both writ petitions, quashing and setting aside the notices issued under Section 148 and the subsequent orders rejecting the Petitioner's objections. For AY 2013-14, the Court found that the Petitioner had disclosed the facts relating to the BPCL Trust during the original assessment proceedings. The Assessing Officer's belief that income had escaped assessment was based on a "change of opinion" rather than a failure to disclose material facts. Similarly, for AY 2014-15, the Court held that the Petitioner had disclosed the details of assets acquired and installed for claiming deduction under Section 32AC in the original assessment proceedings. The Assessing Officer's reasons for reopening were based on the data already furnished by the Assessee, indicating a "change of opinion" which is impermissible in law. Therefore, the Court concluded that there was no failure on the part of the Assessee to disclose full and true material facts for AY 2014-15 regarding the Section 32AC deduction. The Court explicitly stated that other arguments, such as reassessment based on audit objection and invalid sanction, were kept open for decision in an appropriate case.
The Tribunal held that the sales tax incentives received by the Assessees under the relevant State Government schemes (1979 and 1983 Schemes) were on capital account and therefore not chargeable to tax. The reasoning was that the sole purpose of these schemes was to encourage the setting up of new industrial units and/or expansion of existing units in underdeveloped and developing areas, thereby promoting industrial development and generating employment. This purpose establishes a direct nexus with the investment in fixed capital assets, rather than merely assisting in carrying on day-to-day business operations or making the business more profitable. The incentive was seen as funding a part of the cost of setting up the factory. The ratio is that incentives aimed at capital formation and industrial development in backward regions are capital receipts.
The Tribunal held that the sales tax incentives received by the assessees under the 1979 and 1983 Schemes were on capital account and not chargeable to tax. The reasoning was that the primary purpose of these schemes was to promote the setting up of new industries in backward areas, thereby encouraging industrial development and employment generation, rather than assisting in the day-to-day carrying on of business operations or making the business more profitable. This direct nexus with the investment in fixed capital assets and the objective of encouraging capital investment led to the conclusion that the incentives were capital in nature. The judgment relied on previous decisions of the Delhi High Court and a Special Bench of the ITAT, which also found similar incentives to be capital receipts. Consequently, ITXA No. 156 of 2003 filed by the Revenue was dismissed, and ITXA No. 505 of 2003 filed by the Assessee was allowed, directing the revenue to treat the incentive/subsidy as a capital receipt not chargeable to tax.
The High Court allowed both writ petitions. For AY 2013-14, the Court found that the Assessing Officer's belief that income had escaped assessment was based on the Petitioner's alleged incorrect claim of exemption under Section 10(34) regarding dividend income from the BPCL Trust. However, the Court noted that the AO's reasons for reopening relied on data already furnished by the assessee during the original assessment proceedings. Therefore, there was no failure on the part of the assessee to disclose material facts. For AY 2014-15, the Court found that the reopening regarding the Section 32AC deduction was also based on a review of information already on record, specifically a submission dated December 7, 2016, which detailed the claim for investment allowance. The Court concluded that this constituted a 'change of opinion' by the subsequent Assessing Officer, which is impermissible in law. Consequently, the notices issued under Section 148 and the subsequent orders rejecting objections were quashed and set aside. Other contentions raised by the Petitioner were left undecided.
The High Court accepted the statement made by the petitioner's counsel that the Writ Petition had become infructuous due to subsequent developments. Consequently, the Court granted the petitioner's request to withdraw the petition. The High Court did not delve into the merits of the case or the underlying dispute between the petitioner and the revenue. The operative direction was to dismiss the Writ Petition as withdrawn. No order as to costs was made. No issues were left undecided as the matter was disposed of on the procedural ground of withdrawal.
The High Court dismissed the appeal. It noted that a previous Division Bench, including one of the current judges, had dealt with Circular No. 5 of 2024 and its exceptions. In that prior decision, the Court had interpreted clause 3.1(l) of the Circular to exclude appeals arising from proceedings taken against a deductor for failure to deduct tax at source and recovery of tax from the payer. The Court distinguished between a respondent in default for failing to deduct taxes and a payer who failed to pay taxes. Crucially, the Revenue did not dispute that the present appeal arose from an assessment under Section 143(3), not under Section 201. Therefore, the exception contemplated in para 3.1(l) of Circular No. 5/2024 was not attracted. As the tax effect was admittedly less than Rs. 2 Crores, and the exception was not applicable, the appeal was dismissed in light of Circular No. 9/2024 read with Circular No. 5/2024.
The High Court condoned the delay of 40 days in filing the appeals. The Court reasoned that service of the ITAT's order upon the Chartered Accountant, who represented the assessees, does not absolve the Tribunal of its duty to serve the copies directly upon the assessees. The Court noted that the Chartered Accountant's affidavit indicated an inability to recall serving the order copies to the assessees in 2016. Furthermore, the Court distinguished the present case from situations where a lawyer with a Vakalatnama accepts service, or where the order is pronounced in open court. Citing the Orissa High Court's decision in a similar case, the Court held that in the absence of express authorization to the Chartered Accountant to receive the order, the date of receipt by him cannot be the starting point for limitation. The Court was convinced by the applicants' justification that they were unaware of the order until the recovery notice in April 2024, and that they took steps to file the appeals only after receiving the certified copy. Therefore, the appeals were directed to be listed for hearing on merits.
The High Court condoned the delay of 40 days in filing the Income Tax Appeals. The Court held that service of the ITAT order upon the Chartered Accountant, who was an authorized representative, did not absolve the Tribunal of its duty to serve the order upon the assessees directly. The Court distinguished the present case from situations where a lawyer with a Vakalatnama accepts documents, noting that a Chartered Accountant, without specific authorization to accept orders, is not a recognized agent under Order 3 of the Code of Civil Procedure. Relying on precedents, including a decision from the Orissa High Court, the Court emphasized that communication of the order must be to the assessee. The Court was convinced by the applicants' assertion that they gained knowledge of the impugned order only upon receipt of the recovery notice in April 2024. Consequently, the appeals are directed to be listed for hearing on merits.
The High Court held that the ingredients of Section 271(1)(c) of the Income Tax Act, 1961, were not satisfied. While the ITAT found the claim for additional bonus to be 'baseless' and involving 'furnishing of inaccurate particulars', the Court found that the assessee had raised a plausible claim for deduction of a crystallized liability. The Court noted that the assessee did not claim to have actually paid the bonus in the relevant year but rather claimed the crystallized liability as deductible. The Court distinguished the ITAT's finding of 'baseless' claim from a mala fide act of concealment or furnishing of inaccurate particulars, stating that there was no material to indicate any false statement in the return. The Court concluded that the assessee cannot be penalized for raising a plausible claim and that the ITAT had erred in reversing the CIT(A)'s order. The substantial question of law was answered in the negative, in favour of the assessee. The order of the Tribunal was set aside, and the order of the CIT(A) was confirmed.
The High Court allowed the withdrawal of 13 Criminal Writ Petitions (listed by number). The reasoning was based on the petitioners' submission that compounding fees had been paid, resolving the matters. Consequently, these petitions were disposed of as withdrawn. The Court also ordered that any interim relief granted in these withdrawn petitions would stand vacated. For the remaining two petitions, Criminal Writ Petition No.261 of 2023 and Criminal Writ Petition No.224 of 2023, the Court directed them to be detagged from the main group and listed for a future date. Crucially, any ad-interim relief granted in these two specific petitions was ordered to remain in operation until the next hearing date. No decision was made on the merits of the withdrawn petitions.
The High Court held that the solitary question was whether the subsidy received from the RBI could be treated as 'interest' under Section 2(7) of the Interest Tax Act, 1974. The Court referred to Section 2(7) which defines 'interest' as interest on loans and advances made in India and includes commitment charges and discount on promissory notes/bills of exchange, but excludes specific items. Citing Supreme Court judgments in State Bank of Patiala and Muthoot Leasing and Finance Ltd., the Court emphasized that the scope of 'interest' cannot be expanded beyond loans and advances, and tax cannot be imposed by inference or analogy if a case is not covered by the strict letter of the law. Since no loan or advance was given by the Assessee to the RBI, any subsidy or compensation received from the RBI, irrespective of its name, would not convert it into 'interest' as defined. The subsidy was not relatable to a loan or advance given by the Assessee to the RBI, nor could it be treated as commitment charges or discount. The Court noted a similar view taken by the Delhi High Court in Punjab National Bank, against which the Revenue's SLP was dismissed. Therefore, the substantial question of law was answered in the negative. The impugned orders of the Tribunal were quashed and set aside, and the appeal was allowed.
The High Court held that the Respondents acted in violation of the principles of natural justice by granting insufficient time of just one day to the Petitioner to respond to the show cause notices proposing variations. The Court found this to be apparent from the facts presented. Consequently, without going into the merits of the case or other contentions, the Court set aside the assessment order dated September 30, 2021. The matter was remanded back to Respondent No. 1 to pass a fresh de novo order after providing an opportunity of hearing to the Petitioner. This exercise is to be completed within 12 weeks from the date of uploading the order. The Court clarified that no opinion was expressed on the merits of the matter.
The High Court held that the respondents acted in violation of the principles of natural justice by granting insufficient time of just one day to the Petitioner to respond to the show cause notice proposing variations. The Court set aside the assessment order dated September 30, 2021, and remanded the matter back to Respondent No. 1 to pass a fresh de novo order. The fresh assessment is to be completed after providing an opportunity of hearing to the Petitioner within 12 weeks from the date of uploading the order. The Petitioner is directed to communicate the order to the jurisdictional assessing officer within seven days of its upload. The Court clarified that it had not expressed any opinion on the merits of the matter. The issue regarding the non-issuance of a draft assessment order was not explicitly decided on merits but was implicitly addressed by the remand for a fresh de novo order, implying a procedural correction.
The High Court held that the Respondents acted in violation of the principles of natural justice by granting insufficient time of just one day to the Petitioner to respond to the show cause notice proposing variations. The Court noted that the Respondents did not dispute this fact. Consequently, without going into the merits of the case or other contentions, the Court deemed it appropriate to set aside the assessment order. The assessment order dated September 30, 2021, was set aside, and the matter was remanded back to Respondent No. 1 to pass a fresh de novo order after providing an opportunity of hearing to the Petitioner. This exercise was directed to be completed within 12 weeks. The Court clarified that no opinion was expressed on the merits of the matter. The Petitioner was directed to communicate the order to the jurisdictional assessing officer within seven days of its upload.
The High Court held that the Respondents acted in violation of the principles of natural justice by granting insufficient time of just one day to the Petitioner to respond to the show cause notice proposing variations. The Court noted that the show cause notice was issued on September 28, 2021, with a reply deadline of September 29, 2021, and the assessment order was passed on September 30, 2021. The Respondents did not dispute these facts. Consequently, without going into the merits of the case or other contentions, the Court set aside the assessment order dated September 30, 2021. The matter was remanded back to Respondent No. 1 to pass a fresh de novo order after providing an opportunity of hearing to the Petitioner. This exercise is to be completed within 12 weeks from the date of uploading the order. The Court clarified that no opinion was expressed on the merits of the matter. The issue regarding the non-issuance of a draft assessment order was not expressly decided, but the violation of natural justice was the basis for the remand.
The High Court, while not deciding the issues on merits, remanded the matters back to the Commissioner of Income Tax (Appeals) (CIT(A)) for fresh adjudication. The Court directed the CIT(A) to examine the transponder service agreements to determine factually whether the payments constitute 'royalty' under the domestic law or Article 12 of the India-USA Treaty. For payments made prior to the insertion of Explanation 6 by the Finance Act, 2012, the CIT(A) must follow the decision in Reliance Industries Limited, holding that retrospective amendments cannot fasten withholding tax liability if payments were made before the amendment. For payments made post-Finance Act, 2012, the CIT(A) is to examine the agreements and ascertain if the payments constitute 'royalty' under the domestic law or the Treaty, considering Section 90(2) of the Act. The Court clarified that if there is a final determination of no taxability in the hands of Intelsat Corporation, there would be no withholding tax liability. The Court explicitly stated it was not expressing any opinion on the merits or the applicability of Article 12(3) of the Treaty.
The High Court, while admitting the appeals on substantial questions of law, did not adjudicate the issues on merits. Instead, the Court remanded the matters back to the Commissioner of Income Tax (Appeals) (CIT(A)) for fresh adjudication. The Court directed the CIT(A) to examine the transponder service agreements to determine the nature of services rendered and whether the payments constitute 'royalty' under the domestic law or Article 12 of the India-USA DTAA. For payments made prior to the insertion of Explanation 6 by the Finance Act, 2012, the CIT(A) was directed to follow the decision in *Reliance Industries Limited* and hold that no withholding tax liability can be imposed based on a retrospective amendment. For payments made post-Finance Act, 2012, the CIT(A) must ascertain if the payments constitute 'royalty' under the domestic law or the Treaty, considering Section 90(2) of the Act. The Court explicitly stated that it had not expressed any opinion on the merits and that all contentions would be open for the CIT(A) to adjudicate. The CIT(A) was requested to dispose of the appeals expeditiously, by December 31, 2025.
The High Court, while admitting the appeals on substantial questions of law, did not adjudicate the issues on merits. Instead, the Court remanded the matters back to the Commissioner of Income Tax (Appeals) (CIT(A)) for fresh adjudication. The Court directed the CIT(A) to examine the transponder service agreements to determine the nature of services rendered and whether the payments constitute 'royalty' under the domestic law or Article 12 of the India-USA DTAA. For payments made prior to the insertion of Explanation 6 by the Finance Act, 2012, the CIT(A) was directed to follow the decision in *Reliance Industries Limited* and hold that no withholding tax liability can be imposed based on a retrospective amendment. For payments made post-Finance Act, 2012, the CIT(A) must ascertain if the payments constitute 'royalty' under the domestic law or the Treaty, considering Section 90(2) of the Act. The Court explicitly stated that it had not expressed any opinion on the merits and that all contentions would be open for the CIT(A) to adjudicate. The CIT(A) was requested to dispose of the appeals expeditiously, by December 31, 2025.