Chhattisgarh High Court Judgments — 2015

The High Court held that the Appellate Tribunal committed an error in law and fact by remanding the matter to the Assessing Officer for a fresh decision on whether the sales tax subsidy was a capital or revenue receipt. The Court noted that the Assessing Officer had initially treated it as a revenue receipt. The CIT(A), after a detailed examination of the notification dated 16.10.1986, had correctly held it to be a capital receipt. The ITAT, however, failed to discuss the CIT(A)'s order or provide reasons why it was erroneous. Without such discussion, the ITAT could not have directed a fresh consideration by the Assessing Officer. The Court found that the ITAT was unable to distinguish or differ from the CIT(A)'s order and therefore, it was not sustainable. The question of law was answered in favour of the assessee. The order of the ITAT was set aside to the extent it remanded the matter to the Assessing Officer. The appeals were allowed.

The High Court held that the Appellate Tribunal committed an error by remanding the matter to the Assessing Officer for a fresh decision on whether the sales tax subsidy was a capital or revenue receipt. The Court found that the CIT(A) had conducted a full and proper appreciation and consideration of the State Government's scheme under the notification dated 16.10.1986, arriving at a reasoned conclusion that the sales tax subsidy was a capital receipt. The ITAT, however, failed to consider or discuss the CIT(A)'s order, nor did it explain why the CIT(A)'s reasoning was erroneous. Without such discussion, the ITAT could not have directed a fresh consideration by the Assessing Officer. The Court concluded that the ITAT's order was unsustainable on the ground that it failed to consider relevant material. The ITAT was unable to distinguish or differ from the CIT(A)'s order, leading it to remand the matter without proper deliberation. Therefore, the question of law was answered in favour of the Assessee, and the ITAT's order to the extent of the remand was set aside.

The High Court held that the Appellate Tribunal committed an error in law and fact by remanding the matter to the Assessing Officer for a fresh decision on whether the sales tax subsidy was a capital or revenue receipt. The Court noted that the Assessing Officer had initially treated it as a revenue receipt. The CIT(A), after a detailed examination of the notification dated 16.10.1986, had correctly held it to be a capital receipt. The ITAT, however, failed to discuss the CIT(A)'s order or provide reasons why it was erroneous. Without such discussion, the ITAT could not have directed a fresh consideration by the Assessing Officer. The Court found that the ITAT was unable to distinguish or differ from the CIT(A)'s order and therefore, it was not sustainable. The question of law was answered in favour of the assessee. The order of the ITAT was set aside to the extent it remanded the matter to the Assessing Officer. The appeals were allowed.

The High Court held that the Appellate Tribunal committed an error in law and fact by remanding the matter to the Assessing Officer for a fresh decision on whether the sales tax subsidy was a capital or revenue receipt. The Court noted that the Assessing Officer had initially treated it as a revenue receipt. The CIT(A), after a detailed examination of the notification dated 16.10.1986, had correctly held it to be a capital receipt. The ITAT, however, failed to discuss the CIT(A)'s order or provide reasons why it was erroneous. Without such discussion, the ITAT could not have directed a fresh consideration by the Assessing Officer. The Court found that the ITAT was unable to distinguish or differ from the CIT(A)'s order and therefore, it was not sustainable. The question of law was answered in favour of the assessee. The order of the ITAT was set aside to the extent it remanded the matter to the Assessing Officer. The appeals were allowed.

The High Court held that the appeal by the Revenue lacked merit. It found no infirmity in the ITAT's affirmation of the CIT(A)'s order. The Court noted that no additional evidence was sought to be furnished by the assessee before the CIT(A) or the ITAT. Instead, the CIT(A) referred to and relied upon the audited accounts that the assessee had filed before the AO but which the AO had failed to discuss. The Court observed that the AO showed a 'callous attitude' in discharging his statutory duties. The precedents cited by the Revenue were distinguished: Commissioner of Income-Tax v. Popular Electric Co. (P.) Ltd. was not applicable as it did not concern an assessee with compulsory audited accounts, and H.S. Imam v. Commissioner of Income-Tax was irrelevant as it dealt with the now-deleted Section 146 of the Act. The question of law was answered in the negative, against the Revenue. The appeal was dismissed.

The High Court held that to avail the benefit of Section 44AD, the assessee must be engaged in the business of civil construction. The Explanation to Section 44AD states that 'civil construction' includes the construction of any building. The Court reasoned that if an assessee is engaged in the business of civil construction, and this expression includes the construction of any building, there is no reason why it would not include the construction of a building by a land developer/builder/promoter. The Court emphasized that the word 'includes' is used to enlarge the meaning. Interpreting taxing statutes literally, the Court found no ambiguity in the language of Section 44AD read with the Explanation. If the Legislature did not provide for the exclusion of a land developer/builder/promoter, nothing can be added or inserted. The Court noted that the decision in Touch Home Builders and Realtors (supra) relied upon by the Revenue did not contain an analysis of Section 44AD read with its Explanation. The Court found the Tribunal's discussion cryptic and leaving crucial issues undecided. Therefore, the impugned order of the Tribunal was set aside, and the matter was remanded to the Tribunal for fresh consideration and decision in accordance with law.

The High Court held that the Tribunal was not justified in dismissing the appeal based on CBDT Instruction No. 3 dated 09.02.2011. The Court reasoned that the maintainability of appeals by the Revenue is to be determined based on the circulars and instructions in force at the time the appeal was filed. In this case, the appeal was filed on 29.04.2010, at which time CBDT Instruction No. 5 dated 15.05.2008 was operative. CBDT Instruction No. 3 dated 09.02.2011, which introduced a monetary limit of Rs. 3 Lacs for appeals to the Tribunal, was issued subsequently and would not govern appeals filed before its effective date. Clause 11 of Instruction No. 3 explicitly states that it applies to appeals filed on or after 9th February 2011, and cases filed before that date would be governed by the instructions operative at the time of filing. Therefore, the Tribunal erred in applying the later instruction. The High Court set aside the Tribunal's order and remanded the matter for fresh consideration and disposal in accordance with law. No issue was expressly left undecided.

The High Court held that the appeal raised no substantial question of law. It affirmed the view of the CIT(A) and ITAT that shares held by a company do not constitute property, and the allotment of shares by the company does not constitute a transfer of existing property to attract the provisions of the Gift Tax Act by way of a deemed gift. The Court relied on the Supreme Court's judgments in Mrs. Bacha F. Guzdar v. CIT and Khoday Distilleries Ltd. v. CIT, and a Full Bench decision of the Madras High Court in Secretary, Board of Revenue Triplicane, Madras v. Madura Mills Co. Ltd. The Court noted that the Assessing Officer had dismissed the ratio of Getti Chettiar without proper discussion and relied on a Division Bench judgment without considering a Full Bench decision. The Court emphasized the distinction between the creation and transfer of shares, stating that allotment of shares is a creation, not a transfer of existing property. Therefore, Section 4(1)(a) was not applicable as the precondition of transfer of property was not fulfilled. The Court expressed regret that the observations of the CIT(A) regarding Kamlakshi Finance Corporation Ltd. were not heeded before filing the appeal.