The Commissioner of Income-tax, LTU, Bangalore / The Joint Commissioner of Income-tax, LTDU, Bangalore v. Astra Zeneca Pharma India Ltd
[Citation -2020-LL-0612-27]

Citation 2020-LL-0612-27
Appellant Name The Commissioner of Income-tax, LTU, Bangalore / The Joint Commissioner of Income-tax, LTDU, Bangalore
Respondent Name Astra Zeneca Pharma India Ltd.
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 12/06/2020
Assessment Year 1996-97
Judgment View Judgment
Keyword Tags provision for leave encashment • pollution control equipments • limitation prescribed • barred by limitation • notional interest • notional income • lease agreement • loan advanced • depreciation allowance
Bot Summary: The assessing officer by an order dated 26.03.1999 passed an order of assessment and inter alia quantified the total taxable income at Rs.8,38,38,080/-. The Commissioner of Income Tax by an order dated 30.08.2010 held that original order remanding the assessment was passed only to examine two issues viz. The Income Tax Appellate Tribunal by order dated 31.05.2011 inter alia held that from perusal of the order passed by the Income Tax Appellate Tribunal, it is evident that the direction issued by the tribunal as to call for complete information and to pass an appropriate order. Xxxxxxx Notwithstanding anything contained in sub-sections and, in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment under Section 146 or in pursuance of an order, under Section 250, Section 254, Section 263 or Section 264, setting aside or canceling an assessment, maybe made at any time before the expiry of two years from the end of the financial year in which the order under Section 146 canceling the assessment is passed by the assessing officer or the order under Section 250 or Section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under 14 Section 263 or Section 264 is passed by the Chief Commissioner or Commissioner. From perusal of para 12 of the order it is evident that the order of remand has been issued with a view to give effect to the findings of the tribunal and neither the order of assessment has been set aside nor the assessing officer has been directed to carry out fresh assessment. The provisions of Section 153(3) of the Act apply to the fact situation of the case and the tribunal therefore, committed an error of law in holding that the order passed by the Commissioner 18 of Income Tax was passed under Section 153(2A) of the Act. In the result, the order passed by the tribunal dated 29.09.2011 and order dated 31.05.2011 passed by the tribunal are hereby quashed and the matter is remitted to the tribunal to decide the same on merits.


1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 12TH DAY OF JUNE 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO.370 OF 2011 C/W I.T.A.NO.37 OF 2012 I.T.A.NO.370/2011 BETWEEN: 1. COMMISSIONER OF INCOME-TAX LTU JSS TOWERS BSK III STAGE BANGALORE. 2. JOINT COMISSIONER OF INCOME-TAX LTDU JSS TOWERS BSK III STAGE BANGALORE. ... APPELLANTS (By Sri.K.V.ARAVIND, ADV.,) AND: M/S ASTRA ZENECA PHARMA INDIA LTD. P.B.NO.2483 OFF BELLARY ROAD HEBBAL BANGALORE. ... RESPONDENT 2 (By Sri.S.PARTHASARATHI SMT.JINITA CHATTERJEE, ADV.) --- THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT F ORDER DATED 31.05.2011 PASSED IN ITA NO.1224/BANG/2010 FOR ASSESSMENT YEAR 1996-97, PRAYING THATK THIS HON BLE COURT MAY BE PLEASED TO: (I) FORUMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (I) ALLOW APPEAL AND SET ASIDE ORDER DATED 31.05.2011 PASSED BY ITAT, BANGALOREIN ITA NO.1224/BANG/2010 AND CONFIRM ORDERR PASSED BY JT. COMMISSIIONER OF INCOME TAX, LTU, BANGALORE, IN INTEREST OF JUSTICE AND EQUITY. I.T.A.NO.37/2012 BETWEEN: 1. COMMISSIONER OF INCOME-TAX LTU JSS TOWERS BSK III STAGE BANGALORE. 2. ADDITIONAL COMISSIONER OF INCOME-TAX LTDU JSS TOWERS BSK III STAGE BANGALORE. ... APPELLANTS (By Sri.K.V.ARAVIND, ADV.,) AND: M/S ASTRA ZENECA PHARMA INDIA LTD. P.B.NO.2483 OFF BELLARY ROAD HEBBAL BANGALORE. ... RESPONDENT (By Sri.S.PARTHASARATHI SMT.JINITA CHATTERJEE, ADV.) --- 3 THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 29.09.2011 PASSED IN ITA NO.1202/BANG/2010 FOR ASSESSMENT YEAR 1996-97, PRAYING THAT THIS HON BLE COURT MAY BE PLEASED TO: (I) FORUMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (I) ALLOW APPEAL AND SET ASIDE ORDER DATED 29.09.2011 IN ITA NO.1224/BANG/2010 PASSED BY ITAT, BANGALORE, CONFIRMING ORDER OF APELLATE COMMISSINER AND CONFIRM ORDER PASSED BY JOINT COMMISSIONER OF INCOME TAX, LTU, BANGALORE, IN INTEREST OF JUSTICE AND EQUITY. THESE ITAs COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: COMMON JUDGMENT These appeals under Section 260A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) have been filed by revenue. subject matter of I.T.A.No.370/2011 & I.T.A.No.37/2012 pertains to Assessment year 1996-97. Since, appeals have been decided by two different judgments, though they pertain to same Assessment year and since, common questions of law arise for consideration in both appeals, they were heard analogously and are being 4 decided by this common judgment. appeals were admitted on following substantial questions of law: (i) Whether tribunal was correct in holding that order passed by Tribunal dated 31.07.2006 by Tribunal dated 31.07.2006 was under Section 153(2A) of Act and therefore barred by limitation and not under Section 153(3) of Act, which permitted Assessing Officer extended period, as original assessment was neither set aside in entirety or cancelled and only directed to examine two items? (ii) Whether Assessing Officer who passed order dated 15.12.2009 was only giving effect to order passed by Tribunal dated 31.07.2006 and this order fell within Section 153(3) of Act 5 and not under Section 153(2A) of Act as held by Tribunal? 2. For facility of reference, facts from ITA No.370/2011 are being referred to. assessee is manufacturer, seller and trader in pharmaceuticals. assessee filed return of income for Assessment year 1996-97 declaring total income of Rs.1,96,82,930/-. return was processed under Section 143(1A) of Act and was rectified under Section 154 of Act on 27.10.1998. case was selected for scrutiny. Thereupon notices were issued under Section 143(2) and 143(1) to assessee. assessing officer by order dated 26.03.1999 passed order of assessment and inter alia quantified total taxable income at Rs.8,38,38,080/-. 100% Depreciation claimed by assessee on pollution control equipment worth Rs.4,93,00,000/- was 6 disallowed and 80% interest on amount advanced to Madhya Pradesh State Electricity Board to tune of Rs.40 Lakhs was added. Deduction under Section 80I of Act to extent of Rs.1,17,18,570/- was disallowed. Similarly, provision for leave encashment as well as claim for bonus to tune of Rs.4,36,546/- as well as Rs.19,75,555/- respectively was disallowed. 3. Being aggrieved assessee filed appeal before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) by order dated 06.05.1999 directed deletion of notional interest in respect of advance made to Madhya Pradesh State Electricity Board, which was added by assessing officer. revenue challenged aforesaid order before Income Tax Appellate Tribunal. tribunal by 7 order dated 31.07.2006 set aside findings of assessing officer insofar as it granted relief with regard to depreciation and notional interest and matter was remitted to assessing officer to consider controversy afresh. 4. After remand, assessing officer passed order on 15.12.2009. assessing officer disallowed 100% depreciation on pollution control equipments amounting to Rs.4,93,00,000/-. assessing officer also taxed notional income on amount of loan advanced to Madhya Pradesh State Electricity Board. said order was subject matter of challenge before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) by order dated 30.08.2010 held that original order remanding assessment was passed only to examine two issues viz., depreciation 8 and notional interest, which would amount to setting aside entire order of assessment. It was further held that since, there was no order to pass fresh order of assessment, therefore, order giving effect to findings of tribunal was not barred by limitation under Section 153(2A) of Act. 5. aforesaid order was challenged in appeal by assessee. Income Tax Appellate Tribunal by order dated 31.05.2011 inter alia held that from perusal of order passed by Income Tax Appellate Tribunal, it is evident that direction issued by tribunal as to call for complete information and to pass appropriate order. Thus, direction is not in nature requiring positive compliance. It was further held that order passed by assessing officer is beyond period of limitation as prescribed under 9 Section 153(2A) of Act and order of assessment is barred by limitation. tribunal did not decide appeal on merits. Being aggrieved, revenue is in appeal before us. 6. Learned counsel for revenue submitted that provisions to Section 153 of Act have been amended with effect from 01.06.2016. However, pre amended Section would apply to fact situation of case. It is further submitted that provisions of Section 153(2A) would apply if order passed under Section 254 or Section 263 or Section 264 is either set aside or is canceled and direction for fresh assessment is issued. It is further submitted that order of remand in instant case, was not open remand but was limited remand and therefore, limitation prescribed under Section 153(2A) of Act did not 10 apply to fact situation of case. However, aforesaid aspect of matter has not been appreciated by tribunal. It is further submitted that it ought to have been appreciated that order was passed by tribunal to give effect to its finding and therefore, provisions of Section 153(3)(ii) apply to facts of case. It is also urged that in case where no limitation is prescribed, four years time has been held to be reasonable time. In support of aforesaid submissions, reliance has been placed by learned counsel on decisions in RIKHABDAS JHAVERCHAND VS. COMMISSINOER OF INCOME-TAX , 2001 249 ITR 774 BOM, BASU DISTRIBUTORS (P.) LTD. VS. INCOME-TAX OFFICER, WARD 2(3), NEW DELHI , (2007) 159 TAXMAN 410 (DELHI, COMMISSIONER OF INCOME-TAX VS. BHAN TEXTILE (P.) LTD. , (2008) 300 ITR 176 11 (DELHI), INSTRUMENTS AND CONTROL CO. VS. CHIEF COMMISSIONER OF INCOME TAX-1 & 2 , (2012) 25 TAXMANN.COM 16 (GUJARAT), NOKIA INDIA (P.) LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX , (2018) 407 ITR 20 (DELHI), and GE T & D INDIA LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX , (2019) 105 TAXMANN.COM 286 (MADRAS). 7. On other hand, learned counsel for revenue submitted that from perusal of order of tribunal it is evident that it is open remand though not specifically stated to be so in order. It is submitted that matter has been remitted for consideration afresh and therefore, tribunal has rightly held that order of assessment has been passed beyond period of limitation. Alternatively it is submitted that in case, 12 this court does not agree with submissions made on behalf of assessee on issue of limitation, matter may be remitted to tribunal for decision afresh in accordance with law as it has not dealt with controversy on merits. In support of aforesaid submissions reliance has been placed on decisions in DEPUTY COMMISSIONER OF INCOME TAX & ORS. VS. SANJAY JAISWAL & ORS. , (2016) 158 ITD 0397 (KOLKATA) and COMMISSIONER OF INCOME TAX VS. PAUL NOEL RODRIGUES , (2015) 231 TAXMAN 0811 (KARNATAKA). 8. We have considered submissions made on both sides and have perused record. Before proceeding further, it is apposite to take note of relevant extract of Section 153 of 13 Act as it existed at relevant point of time. relevant extract reads as under: 153.Time limit for completion of assessment and reassessment: 1. xxxxxxx (2A) Notwithstanding anything contained in sub-sections (1) and (2), in relation to assessment year commencing on 1st day of April, 1971, and any subsequent assessment year, order of fresh assessment under Section 146 or in pursuance of order, under Section 250, Section 254, Section 263 or Section 264, setting aside or canceling assessment, maybe made at any time before expiry of two years from end of financial year in which order under Section 146 canceling assessment is passed by assessing officer or order under Section 250 or Section 254 is received by Chief Commissioner or Commissioner or, as case may be, order under 14 Section 263 or Section 264 is passed by Chief Commissioner or Commissioner. 3. provisions of sub-Sections (1) and (2) shall not apply to following classes of assessments., reassessmnents and recomputations which may, subject to provisions of sub-Section (2A), be completed at any time- (i) xxxxxx (ii) where assessment, reassessment or recomputation is made on assessee or any person in consequence of or to give effect to any finding or direction contained in order under Section 250, 254, 260, 262, 263 and 264 or in order of any court in proceeding otherwise than by way of appeal or reference under this Act. 9. Thus it is evident that if matter falls under Section 153(2A) of Act, fresh order of assessment has to be passed within prescribed 15 period of two years, whereas, under Section 153(3) of Act, assessment, reassessment or recomputation has to be made on assessee or any person in consequence, or to give effect to any finding or direction contained in order under Section 250, 254, 260,262, 263 and 264 or in order of any court in proceeding otherwise than by way of appeal or reference under this Act, for which no period of limitation is prescribed. However, it is trite law that even when no limitation is prescribed, Act has to be performed within reasonable time. 10. In view of aforesaid well settled legal position, we may advert to facts of case. tribunal in para 12 of order has held as follows: We have perused submissions of assessee, paper book etc. from which it could not derived whether 16 assessee has received from MPSEB amount to extent of 85% of cost of equipment. Therefore, obviously, Commissioner of Income Tax (A) has accepted arguments of assessee of its face value. various circumstances as existing in instant case go to raise lot of doubt in entire transaction. However, one aspect that is absent in instant case is enquiry from State Electricity Board with reference to sale invoice raised on assessee, lease agreement entered into with assessee payment of 20% of Rs.4.93 Crores to assessee and answer to question whether assessee received 85% of Rs.4.93 Crores or not. We are therefore, of view that matter requires reexamination at level of assessing officer. decisions of special Bench (supra) and jurisdictional High Court (supra) would have to be examined with reference to 17 facts of that case and whether fats of case are identical or otherwise. Likewise, decision of Orissa High Court (supra) would also have to be examined in parallel with facts of case of assessee. 11. From perusal of para 12 of order it is evident that order of remand has been issued with view to give effect to findings of tribunal and neither order of assessment has been set aside nor assessing officer has been directed to carry out fresh assessment. In other words, order passed by tribunal is remand on limited issue as indicated in para 12 of order. Therefore, provisions of Section 153(3) of Act apply to fact situation of case and tribunal therefore, committed error of law in holding that order passed by Commissioner 18 of Income Tax (Appeals) was passed under Section 153(2A) of Act. 12. In view of preceding analysis, substantial questions of law framed by bench of this court are answered in favour of revenue and against assessee. In result, order passed by tribunal dated 29.09.2011 and order dated 31.05.2011 passed by tribunal are hereby quashed and matter is remitted to tribunal to decide same on merits. In result, appeals are allowed. Sd/- JUDGE Sd/- JUDGE ss Commissioner of Income-tax, LTU, Bangalore / Joint Commissioner of Income-tax, LTDU, Bangalore v. Astra Zeneca Pharma India Ltd
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