Delhi High Court
Commissioner Of Income Tax vs M/S International Tractor Ltd. on 30 November, 2017
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 30.11.2017
+ ITA 497/2004
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr. Ashok K. Manchanda &
Mr. Raghvendra Singh, Advs.
versus
M/S INTERNATIONAL TRACTOR LTD. ..... Respondent
Through: Mr. Ashish Gupta & Mr. Aniket
D. Agrawal, Advs.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
S. RAVINDRA BHAT, J.(ORAL)
1. The following two questions of law were framed on
18.05.2006:
(i) Whether the Tribunal was correct in holding that
for purposes of deduction U/s 80 (1A) of the
Income Tax Act, 1961, the assessee should be a
small scale undertaking on the last day of the
previous year relevant to the initial/first
assessment year and that the said requirement
need not be satisfied in the subsequent
assessments?
(ii) Whether the impugned order dated 1.3.2004 could
be validly made having regard to the fact that one
ITA No.497/2004 Page 1
of the members of the Tribunal who was a party to
the said order had retired before the said date?"
2. As far as the substantive question i.e. with respect to
permissibility of the deduction under Section 80-1A of the
Income Tax Act, 1961 (hereafter referred to as 'the Act'), the
ITAT's decision for other years, i.e. A.Y. 2000-01, 2001-02 and
2002-03 were subject matter of other orders made by the ITAT
(20.06.2008 for two years, 17.08.2007, 28.03.2005 and
05.09.2008 respectively). Those became the subject matter of
appeals before this Court i.e. ITA Nos.1082/2005, 690/2008,
225/2009, 1189/2009 and 251/2010. All those appeals by the
Revenue, urging common questions with respect to
admissibility of the benefit/deduction under Section 80-1A of
the Act, were dismissed; the questions of law were answered
against the Revenue.
3. The lone question which survives for the decision by this
Court is as to the character of the determination made by the
ITAT in this case. The order of 04.05.2017 somewhat deals and
crystallizes the issue. In short, it is whether the signature
appended to the order of one of the members i.e. Shri R.M.
Mehta, who retired on 27.12.2003 can be said to bestow it the
character of an order. The other member Shri Ram Bahadur
signed the order on 01.03.2004. It was in the light of these facts
that the Court framed the second question of law in these
appeals. The order of 04.05.2017 noticed that the requirement
ITA No.497/2004 Page 2
of pronouncing the judgment in open court as it were, did not
exist before the judgment in Commissioner of Income Tax v.
Sudhir Choudhrie (2005) 278 ITR 490 (Del). As a result of that
judgment, Rule 34 was inserted in the ITAT Rules to facilitate
that procedure. The Court, in its order of 04.05.2017 noticed
and held that since the change of Rule was prospective, there
was no illegality - to an order on account of signature of Shri
Ram Bahadur on 01.03.2004 even though its author had signed
it earlier.
4. In the opinion of this Court, the merits of the issue is
covered by the common judgment of 20.07.2017 in the other
appeals (Commissioner of Income Tax v. M/s International
Tractors Ltd., ITA No.1082/2005 and connected appeals
noticed earlier).
5. Learned counsel for the Revenue/appellant urged that on
the merits the Court has to resolve whether in fact the
Commissioner could be faulted for issuing the order under
Section 263 of the Act because for the first year i.e. A.Y. 1997-
98, the deduction under Section 80-1A of the Act had not been
claimed by the assessee. It was contended that for the
subsequent years too the assessee could not claim such status
given the nature of its investment.
6. It is pointed out on behalf of the assessee, on the other
hand, that the common judgment of this Court in
ITA No.497/2004 Page 3
M/s International Tractors Ltd. (supra), dated 20.07.2017 has in
fact dealt with all issues including the permissibility of the
benefit under Section 80-1A of the Act for subsequent years,
when in the eventuality of the assessee not being granted that
benefit for the first year.
7. This Court has considered the common judgment of
20.07.2017 for the other years, discusses the issue elaborately
and notices it as follows:-
"43. The ITAT in the said order agreed with the
Assessee that Section 80-IA did not contemplate
the carrying out of a yearly review to ensure that
on the last date of other previous year, of the ten
AYs for which the deduction was allowed, the
eligibility condition stood fulfilled. As rightly
pointed out by Mr. Vohra in the initial AY 1997-
98, the Assessee was facing a loss and, therefore,
did not make a claim. Nevertheless that continued
to remain the initial AY. The Assessee claimed
deduction only in regard to the remaining years.
The ten years would begin to be counted from the
AY 1997-98 itself although the deduction was not
claimed for that AY. It could not have been
claimed for AY 1997-98 because under Section 80-
IA, the aggregate deduction claimed of the
Assessee could not have exceeded its gross total
income.
44. The question is whether on the last day of
the previous relevant to AY 1997-98 the Assessee
fulfilled the eligibility condition? It was repeatedly
urged by Mr. Manchanda that the investment in
P&M on the last date of previous year was above
Rs. 60 lacs. He referred to an order dated 11th
ITA No.497/2004 Page 4
July, 2003 passed by the CIT under Section 263 of
the Act for AY 1999-00. However, relevant to AY
1998-99, the factual determination by the CIT(A)
and the ITAT is that the Assessee did fulfil the
eligibility condition. The total investment in P&M
was worked out to be Rs. 41.19 lacs. This fact has
not been controverted by the Revenue.
***** ***** *****
63. In view of the authoritative pronouncements
of the Courts as discussed hereinbefore, the Court
is unable to accept the plea of the Revenue in the
present case that:
(i) The Assessee here did not fulfil the
eligibility condition for the initial AY i.e., 1997-98;
and
(ii) That notwithstanding that it may have
fulfilled the eligibility conditions in the initial AY,
it nevertheless had to fulfil the such eligibility
condition for every one of the ten consecutive AYs
inclusive of the initial AY in order to be eligible for
the deduction."
8. It is thus apparent that on the merits of the treatment or
rather the claim to the deduction under Section 80-1A of the Act
- in the Revenue's appeals for subsequent and later years, this
Court had ruled against the Revenue. The present case concerns
A.Y. 1999-2000. The immediately preceding year i.e. 1998-99
and the succeeding year 2000-01, have been considered by this
Court on identical issues. The facts in those appeals were that
the claim in 80-1A of the Act was sought to be re-opened under
Section 147/148 and under Section 263 (for A.Y. 2000-01) of
the Act. The Court also had the occasion to exercise power
ITA No.497/2004 Page 5
under Section 263 for A.Y. 2001-02 in circumstances similar or
rather identical to the present one.
9. Given these facts, the ruling of this Court in its judgment
of 20.07.2017 covers the merits of the appeal i.e. question No.1
framed for its merits for A.Y. 1999-00 in this appeal. In these
circumstances, this Court is of the opinion that as to the
character of the order, even if the Revenue were to succeed,
upon remission which would be the best order it can claim, the
ultimate result would be the same i.e. since the ITAT would be
bound by the judgment of 20.07.2017.
10. Having regard to the above facts, the question No.1
framed for this appeal is answered against the Revenue and in
favour of the assessee. In the peculiar circumstances of the
case, question No.2 is kept open for the parties to contend.
11. The appeal is consequently dismissed.
S. RAVINDRA BHAT, J
SANJEEV SACHDEVA, J
NOVEMBER 30, 2017
kks
ITA No.497/2004 Page 6
