Uttarakhand High Court Judgments — 2019

The High Court held that the assessee's appeal necessitates rejection even on merits, making it unnecessary to dwell on whether the contention could have been raised in an application under Section 154. The Court found it difficult to accept the assessee's submission that the law declared with respect to Section 192(1) of the Act in Director of Income Tax, International Taxation Vs. M/s Maersk Co. Ltd. would automatically apply to Section 195(1). Such an acceptance would lead to absurd consequences, implying the Income Tax Department would have to charge interest on itself for non-deduction of tax at source on interest paid by it. The Court noted that the Income Tax Department had deducted tax at source at Rs. 24,77,391/- from the interest paid to the assessee. The Assessing Officer rightly levied interest under Section 234B for the assessee's failure to pay advance tax on the differential amount of tax determined at 42% on the interest income, as opposed to the 15% offered by the assessee. The Court was satisfied that the order passed by the Tribunal did not necessitate interference. The appeal was dismissed.

The High Court held that the Tribunal erred in dismissing the Revenue's appeal and following the decision in Director of Income-Tax v. Maersk Co. Ltd. (334 ITR 79). The Court clarified that the Maersk judgment, which dealt with interest on non-deduction of tax at source on salaries, was not applicable to the present case, which concerned interest under Section 234B for failure to pay advance tax. However, the Court found considerable force in the assessee's submission that their appeal (ITA No. 2354/Del/2012) had been allowed by the Tribunal on 22.10.2018, setting aside the tax levy itself by holding no Permanent Establishment existed. Therefore, if the tax liability was set aside, the question of interest for non-payment of advance tax would not arise. The Court noted that the Revenue had appealed the Tribunal's order in ITA No. 2354/Del/2012. Consequently, the Court disposed of the present appeal, making it clear that the assessee's liability to pay interest under Section 234B would be subject to the outcome of the Revenue's pending appeal (Income Tax Appeal No. 7 of 2019).

The High Court held that the contention regarding the deduction of payments to sub-contractors under Section 44BB of the Income Tax Act, raised for the first time during the hearing of the appeal, was impermissible. The Court distinguished the present case from precedents cited by the Revenue, noting that in those cases, the issues were either raised before lower authorities or were pure questions of law. The Court found that the assessment order regarding income arising within India had attained finality and that the issue was not raised before the CIT(A) or ITAT, nor was it part of the grounds of appeal before the High Court. Therefore, it was not a pure question of law unrelated to facts that could be raised for the first time under Section 260A. The Court saw no reason to entertain the appeal on this question. The appeal was dismissed.

The High Court held that the appeal filed by the revenue did not give rise to any substantial question of law, warranting interference under Section 260A of the Income Tax Act, 1961. The Court found that the ITAT had considered all contentions raised by both the assessee and the revenue, on facts and law, in its elaborate and well-considered order. The Tribunal had rightly agreed with the assessee's contention that the revenue had consistently accepted the trust's objects, such as providing medical relief, as falling within the definition of 'charitable purpose' under Section 2(15) in previous years. Consequently, the Tribunal correctly held that the assessing officer was not justified in denying the assessee exemption under Sections 11 and 12 of the Act. The High Court was satisfied that the ITAT's conclusion, deciding all issues in favour of the assessee and holding them entitled to exemption, suffered from no legal infirmity. The appeal was accordingly dismissed.

The High Court held that the Tribunal had failed to examine the material facts, specifically the terms and conditions of the contract between the assessee and ONGC, and had not assigned any reasons for its conclusion that gross receipts, including reimbursement of customs duty, are to be considered under Section 44BB of the Income Tax Act. The Court found that this failure to consider relevant questions of fact and law gave rise to a substantial question of law, warranting interference under Section 260A. Consequently, the High Court set aside the Tribunal's order and restored the appeal to the Tribunal's file for a fresh decision in accordance with the law, with utmost expedition. The Court did not decide the substantive issue of whether customs duty reimbursement is taxable under Section 44BB.

The High Court held that interference under Section 260A is justified only if a substantial question of law arises, which would occur if the Tribunal's findings on facts were based on no evidence or were perverse. The Court found no such infirmity in the ITAT's order. Regarding Section 80A(5), the Court noted that the Tribunal had observed that the assessee had claimed deduction towards purchases, and these were disallowed by the AO. Since a claim was made, Section 80A(5) was not applicable. Furthermore, the Court was informed that during the pendency of the appeal before the CIT(A), the AO was directed to verify the genuineness of the purchases, and on verification, found that the purchases were indeed made. Therefore, the AO should not have made the disallowance in the first place. The Court concluded that no interference was called for under Section 260A, and the appeal failed.