Delhi High Court
The Commissioner Of Income Tax vs M/S. Jindal Saw Pipes Ltd. on 6 September, 2010
Author: Manmohan
#16
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 221/2010
THE COMMISSIONER
OF INCOME TAX ..... Appellant
Through Mr. Sanjeev Sabharwal, Senior
Standing Counsel
versus
M/S. JINDAL SAW PIPES LTD. ..... Respondent
Through None
% Date of Decision: 6th September, 2010
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment? No.
2. To be referred to the Reporter or not? No.
3. Whether the judgment should be reported in the Digest? No.
MANMOHAN, J:
CM 3201/2010
Allowed, subject to all just exceptions.
ITA 221/2010
1. The present appeal has been filed under Section 260A of the
Income Tax Act, 1961 (hereinafter referred to as "Act, 1961")
challenging the order dated 7th November, 2008 passed by the Income
Tax Appellate Tribunal (for brevity "Tribunal") in ITA No.
2587/Del/2006 for the Assessment Year 2003-04.
2. By way of present appeal, the following questions of law have
been raised :-
i) Whether ITAT/CIT(A) erred in directing the Assessing
Officer (in short "AO") to allow the revised, claim of the
assessee company for deduction under Section 10B?
ii) Whether the ITAT erred in law in treating revised return
filed by the assessee on 31st March, 2006 as valid, when the
last date for filing of return as per the provisions of Section
139(5) 31st March, 2005?
iii) Whether the ITAT erred in accepting the change of method
of accounting the financial charges from turn over base to
capital investment base which has been regularly followed
by the assessee.
iv) Whether the ITAT erred in law in deleting the addition of
` 47,84,365/- for infraction of law in paying sales
commission on Government purchases under Explanation
to Section 37(1) of the Income Tax Act, 1961?
3. Since the first two questions relate to jurisdiction of
Commissioner of Income Tax (Appeals) [in short, "Commissioner"] to
entertain revised claim of the assessee during appellate proceedings, we
are dealing with both the questions simultaneously.
4. In our opinion, the authority of Commissioner is co-extensive
with that of AO. Moreover, Section 250(5) of the Act, 1961 allows the
assessee to raise an issue not even forming part of the grounds of
appeal. In fact, the Supreme Court in National Thermal Power Co. Ltd.
Vs. Commissioner of Income Tax, (1998) 299 ITR 383 has held as
under :-
"The view that the Tribunal is confined only to issues
arising out of the appeal before the Commissioner of
Income-tax (Appeals) takes too narrow a view of the
powers of the Appellate Tribunal [vide, e.g., C.I.T, v.
Anand Prasad : [1981] 128 ITR 388 (Delhi), C.I.T. v.
Karamchand Premchand P. Ltd. : [1969] 74 ITR
254(Guj) and C.I.T. v. Cellulose Products of India Ltd.
[1985] 151 ITR 499 (Guj). Undoubtedly, the Tribunal
will have the discretion to allow or not allow a new
ground to be raised. But where the Tribunal is only
required to consider a question of law arising from the
facts which are on record in the assessment
proceedings we fail to see why such a question should
not be allowed to be raised when it is necessary to
consider that question in order to correctly assess the
tax liability of an assessee.
The reframed question, therefore, is answered in the
affirmative, i.e., the Tribunal has jurisdiction to
examine a question of law which arises from the facts
as found by the authorities below and having a bearing
on the tax liability of the assessee."
5. Consequently, in our opinion, the first two questions are
conclusively settled against the revenue.
6. As far as the objection of the Department with regard to the
change in method of distribution of common expenses is concerned, we
are of the view that the Tribunal has given cogent reasons for rejecting
the revenue's argument. The relevant portion of the Tribunal's order is
reproduced hereinbelow :-
"We are of the view that once the new method by the assessee
is found to be more scientific and appropriate, the bona fide of
the assessee to adopt such a method cannot be doubted merely
because the same is resulting into more benefits to it.
Moreover, this entire issue had cropped up as a result of AO's
refusal to allow the claim of the assessee company for netting
of the interest income against interest expenditure and since
the assessee company has finally given up the said claim of
netting before the learned CIT(A) while adopting the new
method of allocation of interest expenses incurred at HO level,
we4 are of the view that there is no reason to doubt the bona
fide of the assessee company in adopting the new method. As
such, considering all the facts of the case, we hold that there is
no infirmity in the impugned order of the learned CIT(A)
allowing the revised claim of the assessee for higher deduction
U/s 10B on the basis of new method of allocation of interest
expenditure incurred at HO level to different units and
upholding the same on this issue, we dismiss ground No. 2 of
the Revenue's appeal."
7. From the above, it is apparent that the assessee has in a bona fide
manner adopted a more scientific basis for distribution of common
expenses and accordingly, the revenue cannot raise a grievance on this
score.
8. As far as the fourth question is concerned, we find that the
Tribunal has followed its own decision in the case of the assessee itself
for the assessment year 2002-03 in ITA No. 3879/Del/2005. It is
pertinent to mention that even an appeal preferred by the Department
against the said order has been dismissed by this Court in ITA No.
758/2009 on 4th August, 2009. The aforesaid order dated 4th August,
2009 is reproduced hereinbelow :-
"In our order dated 28.7.2009 we had recorded the
statement of the counsel for the appellant that on second
question of law ITA No.784/2007 has already been
admitted. It is pointed out by learned counsel that there
is a typing error and in fact the appeal which is admitted
is ITA No.784/2005. However, it is not necessary to
summon that file inasmuch as after going through the
proposed second question of law as raised in this appeal
and the orders passed by the ITAT, we find that it is a
pure question of fact decided by the Tribunal since no
question of law arise, this appeal is dismissed."
9. Consequently, the present appeal, being bereft of merit, is
dismissed in limine.
MANMOHAN, J
CHIEF JUSTICE
SEPTEMBER 06, 2010
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