S.80HHC : Export business – Industrial undertaking – Whether the assessee is entitled to deductions under all three sections, i.e. 80HHC, 80-IA, 80-IB, matter referred to larger Bench. [S. 80-IA(9), 80-IB]
Controversy on whether S. 801A(9) mandates whether the amount of profit allowed as deduction u/s. 80-1A(1) has to be reduced from the profits of the business of the undertaking while computing deduction under any another provision under heading “C” in Chapter VI-A of the Income-tax Act, 1961 is referred to larger Bench. While Hon’ble Mr. Justice Anil R. Dave took the view that the judgment of the Delhi High Court in Great Eastern Exports v. CIT [2011] 332 ITR 14 (Delhi) laid down the correct position in law and allowed the appeals of the Revenue, Hon’ble Mr. Justice Dipak Misra dissented and held that the law laid down by the Bombay High Court had in Associated Capsules Private Limited v. Dy. CIT [2011] 332 ITR 42 (Bom.) lays down the correct position in law and dismissed the appeals of the Revenue. In view of difference of opinion, the matters have been referred to a larger Bench in terms of signed reportable judgment. The Registry has been directed to place the matters before the Hon’ble the Chief Justice of India.
ACIT v. Micro Labs Ltd.( 2016) 380 ITR 1 (SC)
S.143(3) : Assessment – Natural justice – Denial of opportunity to cross examine witness – Failure to give the assessee the opportunity to cross-examine witnesses whose statements are relied upon results in breach of principles of natural justice. It is a serious flaw which renders the order a nullity. [Central Excise Act, 1944, S. 3, Rules 1944, R. 173C)
The assessee raised a plea that it was not allowed to cross-examine the dealers whose statements were relied upon by the Adjudicating Authority while passing the order. However, the Tribunal rejected the plea on the basis that “The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex-factory prices remain static”. On appeal by the assessee to the Supreme Court HELD allowing the appeal:
Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.
Andaman Timber Industries v. CCE (2015) 127 DTR 241/ 281 CTR 241 (SC)
S.147 : Reassessment – Intimation – Change of opinion – Intimation is not an assessment, there is no question of “change of opinion” by the Assessing Officer – Reassessment was held to be valid. [Ss. 143(1), 148 ]
Intimation is not an assessment, there is no question of “change of opinion” by the Assessing Officer. Reassessment was held to be valid. (CA No. 6758 of 2004, dt. 17-4-2015) (AY. 1991-92)
DCIT v. Zuari Estate Development & Investment Co. Ltd. (2015) 373 ITR 661 /279 CTR 527 / 124 DTR 222 / (2016) 236 Taxman 1 (SC)
S.256 : High Court – Reference – Reference jurisdiction High Court should not act as an appellate Court to review findings of fact arrived at by the Tribunal by a process of reappreciation and reappraisal of the evidence on record
The Court held that it is well settled that issues of fact determined by the Tribunal are final and the High Court in exercise of its reference jurisdiction should not act as an appellate Court to review such findings of fact arrived at by the Tribunal by a process of reappreciation and reappraisal of the evidence on record. On merit dismissed the appeal of assesee. (AY.1984-85). (C. A. No. 1964 of 2008, dt. 18-1-2016)
Ganapathy & Co. v. CIT (SC); www.itatonline.org
S.271C : Penalty – Failure to deduct tax at source – Penalty cannot be levied if Department is unable to show contumacious conduct on the part of the assessee. [S. 201(1), 201(IA)]
The Tribunal deleted the levy of penalty u/s. 271-C for failure to deduct tax at source on the basis that the department has to show that there was “contumacious conduct on the part of the assessee, which was affirmed by the High Court. On appeal to the Supreme Court, HELD dismissing the appeal:“On facts, we are convinced that there is no substantial question of law, the facts and law having properly and correctly been assessed and approached by the Commissioner of Income Tax (Appeals) as well as by the Income Tax Appellate Tribunal. Thus, we see no merits in the appeal and it is accordingly dismissed. No costs. ”(C.A. No. 1704 of 2008, dt. 7-1-2016)
CIT v. Bank of Nova Scotia (SC) ; www.itatonline.org
Interpretation of taxing statues – Central Board of Direct Taxes – CBDT & Govt. are bound by their own interpretation of a statutory provision [S. 119]
Central Board of Direct Taxes – CBDT & Govt .are bound by their own interpretation of a statutory provision. Principle of “contemporanea expositio”. The word “or” can be interpreted as “and” if the former leads to unintelligible and absurd results. (CA No. 1978 of 2007, dt. 9-10-2015)
Spentex Industries Ltd. v. CCE (SC); www.itatonline.org.