BANSHIDHAR PANDA v. INSPECTING ASSISTANT COMMISSIONER
[Citation -1986-LL-0114-1]

Citation 1986-LL-0114-1
Appellant Name BANSHIDHAR PANDA
Respondent Name INSPECTING ASSISTANT COMMISSIONER
Court ITAT-Cuttak
Relevant Act Income-tax
Date of Order 14/01/1986
Assessment Year 1979-80
Judgment View Judgment
Keyword Tags new industrial undertaking • original memorandum • revenue authorities • legislative history • regular assessment • additional ground • additional tax
Bot Summary: According to him, we should follow the decision of the Supreme Court in the case of Coromandel Fertilizers Ltd. supra without reading the decision in the case Ahmedabad Mfg. and Calico Printing Co. Ltd. supra and read the decision in the case of Cornomandel Fertilizers Ltd supra and apply the said ratio to the facts of this case. Accourding to him a careful consideration of the provisions of law as enumerated above, would lead to the irresistible conclusion the the decision of the Gujarat High court in the case of Ahmedabad Mfg. and Calico Printing Co Ltd. supra was not correct and so should not be followed by us. In spite of the said pleading, the High Court pointed out that thee have been subsequent decisions of the Supreme court and other overriding considerations for which the decision in the case of Coromnandel Fertilizers Ltd. supra could not be followed. The same meaning must be reflected in the provisions of section 80K and it is because of this decision in Patiala Flour Mills Co.'s case 1978 115 ITR 640 SC, which is a decision of three judges and in the light of the section of the Supreme Court in K. S. Subramanian's case AIR 1976 SC 2433, that we are deciding this case and taking the view that we do. We are not aware of any decision of any other High court holding a contrary view, nor has the assessee pointed out any such case to persuade us to differ from the view expressed in Ahmedabad Mfg. Calico Printing Co. Ltd.'s case supra. In the case of CIT v. Smt. Godvaraidevi Saraf 1978 113 ITR 589 Bom., it has been held by the Bombay High Court that the Tribunal, acting anywhere in the country, has to respect the law laid down by the High court though of a different state so long as there is no contrary decision of any other High court on that question. We agree with the revenue authorities that the decision in the case of Ahmedabad Mfg. and Calico Printing Co. Ltd. which has considered all the decision of the Supreme court on the subject has to be respectfully followed.


This appeal has been filed by assessee against order dated 2-3- 1983 of Commissioner [Appeals] relating to assessment year 1979-80. 2. At outset, we may state that second ground taken in this appeal was not pressed before us at time of hearing and so we find same against assessee. 3. That leaves only one ground for our consideration. This ground states that assessing officer erred in not granting relief under section 80K of Income-tax Act, 1961 ['the Act'] on entire dividend of Rs. 4,49,573 received by assessee form IMFA Ltd. assessee is individual. In course of assessment proceedings, he claimed relief under section 80K on entire dividend received by him from IMFA Ltd. assessing officer found that new industrial undertaking had no profit during relevant assessment year and so relief admissible to company had been carried forward under section 80J [3] of Act. Relying on decision in case of Ahmedabad Mfg. & Calico Printing Co. Ltd. v. A. V. Joshi, ITO [1979] 118 ITR 544 [Guj.] assessing officer did not allow any relief under section 80K on ground that no deduction under section 80J was actually allowed in case of company declaring dividend. 4. assessee appealed to Commissioner [Appeals] and contended that assessing officer erred in his decision. Reliance was placed on decision of Supreme Court in case of Union of India v. Cornomandel Fertilizers Ltd. [1976] 102 ITR 533. It was urged that in case of Ahmedabad Mfg. and Calico Printing Co. Ltd. case [supra], decision of Supreme Court in case of Coromandel Fertilisers Ltd. [supra] has been ignored in preference to another decision of Supreme court in case of CIT v. S. S. Sivan Pillai [1970] 77 ITR 354. It was further urged that decision in case of Ahmedabad Mfg. and Calico Printing Co. Ltd. [supra] given by Gujarat High Court was not correct and should be not be followed. Commissioner [Appeals] considered contentions of assessee but did not agree with same. He quoted relevant portions of decision in case of Ahmedabad Mfg. & Calico Printing Co. Ltd. [supra] wherein Gujarat High court has considered all Supreme Court decisions including those given before and after decision in case of Cormomandel Fertilizers Ltd. [supra]. He held that Gujarat High court has fully considered Supreme court decision in case Coromandel Fertilizers Ltd. [supra] and yet came to conclusion on basis of subsequent Supreme court decision in case of CIT v. Patiala Flour Mills Co. [P.] Ltd. [1978] 115 ITR 640 and Union of India v. K. S. Subranmanian AIR 1976 SC 2433 that relief under section 80K allowable in hands of shareholder should be limited to amount of relief given under section 80J to company declaring dividend. In this view of matter, he rejected claim of assessee. 5. Another ground was taken before Commissioner [Appeals] by assessee, viz., that assessing officer of Company declaring dividend had issued certificate under section 197[3] of Act to effect that entire amount of dividend proposed to be declared by company would be exempt in hands of shareholder under section 80K. In view of above certificate given by said officer, it was urged that company did not deduct any tax while distributing dividend to shareholders. Consequently, it was urged that department could not later turn round and say that entire dividend is not exempt under section 80K for some reason or other. Commissioner [Appeals] considered this contention by rejected same on ground a certificate under section 197[3] did not operate as bar against department to ascertain correct percentage of dividend qualifying for relief under section 80K while doing assessments of shareholders. In his view of matter, Commissioner [Appeals] upheld decision of assessing officer and rejected contention of assessee on point under consideration. 6. Shri B. K. Mohanty, learned representative for assessee, urged before us more or less, same grounds that were advanced before Commissioner [Appeals] as enumerated above. He kly contended that decision of Gujarat High Court in case of Ahmedabad Mfg. & Calico Printing Co. Ltd. [supra] was incorrect and should not be followed by us. According to him, we should follow decision of Supreme Court in case of Coromandel Fertilizers Ltd. [supra] without reading decision in case Ahmedabad Mfg. and Calico Printing Co. Ltd. [supra] and read decision in case of Cornomandel Fertilizers Ltd [supra] and apply said ratio to facts of this case. In this connection, he took us through legislative history of sections beginning from section 15C of Indian Income tax Act, 1922 and then proceeded to sections 80K, 84 and 85 of 1961 Act. In this connection he also took us through provisions of section 80J [3] as well as circular No. 5P, dated 9-10-1967 issued by CBDT published in Sampat Iyenger's Law of Income tax, Seventh edn, Vol. 3, p. 2778. Accourding to him careful consideration of provisions of law as enumerated above, would lead to irresistible conclusion the decision of Gujarat High court in case of Ahmedabad Mfg. and Calico Printing Co Ltd. [supra] was not correct and so should not be followed by us. He also referred to decision of Supreme Court in case of Union of India v. Godfrey Philips India Ltd. 1985 ECR 1989 for proposition that department cannot change its position after having let assessee to believe that dividend in hands of shareholder would be exempt under section 80K by virtue of certificate under section 197[3] issued by assessing officer assessing company declaring dividend. 7. Shri B. Mishra, learned representative for department, on other hand, supported order of Commissioner [Appeals]. He took us through decision in case of Ahmedabad Mfg. & Calico Printing Co Ltd. [supra] and pointed out that arguments now raised before us were also raised before Gujarat High court and decision therein has been given after considering all aspects of matter. Regarding argument based upon certificate issued under section of collecting tax by way of deduction at source and so it could not be taken as binding on assessee in officer doing regular assessment of shareholders. In this connection, he filed copy of certificate dated 9-6-1977 issued by assessing officer which clearly states at end: 'the certificate is issued provisionally as final assessment has not yet been completed.' 8. We have carefully considered contentions of both parties as well as facts on record. issue raised before us is s to whether shareholder i s entitled to relief under section 80K in respect of dividends received by him even though company declaring dividends could not get received by him even though company declaring dividends could not get any deduction under section 80J because of lack of profits in new industrial undertaking in relevant previous year. This very issue has been considered in detail by their Lordship of Gujarat High Court in case of Ahmedabad Mfg. & Calico Printing Co. Ltd [supra]. Arguments similar to those taken by assessee before us wee also advanced in that case. At p. 562, it has been stated "Mr. Kaji for petitioner said that section 80K having been interpreted by Supreme court in Coromandel Fertilizers case [1976] 102 ITR 533, that interpretation is binding onus and therefore, we should allow petition in light of that decision". In spite of said pleading, High Court pointed out that thee have been subsequent decisions of Supreme court and other overriding considerations for which decision in case of Coromnandel Fertilizers Ltd. [supra] could not be followed. AT p. 572, High court concluded thus: "Under scheme of section 80J as explained by Supreme court by Bench of three judges in Patiala Flour Mills Co's case [1978] 115 ITR 640, entitlement is available under section 80J [1] only if there are assessable profit and gains and not otherwise. same meaning must be reflected in provisions of section 80K and it is because of this decision in Patiala Flour Mills Co.'s case [1978] 115 ITR 640 [SC], which is decision of three judges and in light of section of Supreme Court in K. S. Subramanian's case AIR 1976 SC 2433, that we are deciding this case and taking view that we do". In view of above clear and categorical exposition of law of Hon'ble Gujarat High Court there is no room for coming to any conclusion other than one arrived at their in. We are not aware of any decision of any other High court there is no room for coming to any conclusion other than one arrived at therein. We are not aware of any decision of any other High court holding contrary view, nor has assessee pointed out any such case to persuade us to differ from view expressed in Ahmedabad Mfg. & Calico Printing Co. Ltd.'s case [supra]. In case of CIT v. Smt. Godvaraidevi Saraf [1978] 113 ITR 589 [Bom.], it has been held by Bombay High Court that Tribunal, acting anywhere in country, has to respect law laid down by High court though of different state so long as there is no contrary decision of any other High court on that question. Hence, we agree with revenue authorities that decision in case of Ahmedabad Mfg. and Calico Printing Co. Ltd. (supra) which has considered all decision of Supreme court on subject has to be respectfully followed. 9. Coming to argument based on certificate given under section 197(3) , we find that said certificate was provisionally given in order to facilitate early collection of tax and same is not binding either on assessee or on department vis vis assessment of recipient shareholder. That certificate authorizes or obliges only dividend declaring company and has no bearing on assessment of share holder. This is clear from scheme of Act. Otherwise, there was no necessity for shareholder to declare dividend in return filed by him and claim refund or pay additional tax, as case may be, as required under law. Hence, we do not see any force in this argument. 10. For above reasons, we uphold order of Commissioner (Appeals) and reject ground taken by assessee before us. However, we make it clear that relief under section 80K is admissible in hands of assessee to extent, and only to extent of actual deduction of section 80J relief determined in assessment of dividend declaring company, calculated proportionately. 11. At time of hearing, additional ground was sought to be raised before us. We find that petition does not spell out actual additional ground. In any case, it appears to be concerning with quantum of relief under section 80K. admission of this additional ground would involve investigation into fresh facts. Besides, no satisfactory r reason was given before us as to why this ground was not taken at time of filing original memorandum of appeal. Hence, we decline to admit this additional ground at this late stage. 12. In result, appeal is dismissed. *** BANSHIDHAR PANDA v. INSPECTING ASSISTANT COMMISSIONER
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