CPT V24P7-Art1 (Content).pmd - Taxmann

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DIRECT TAX LAWS Think twice before withdrawing appeal filed before ITAT An analysis of the decision of the Bombay High Court in the case of CIT v. Jamnadas Virji Shares & Stock Brokers (P.) Ltd. [2012] 21 taxmann.com 27 interpreting rule 27 of ITAT Rules, 1963 INTRODUCTION 1. Sometimes when the provisions of the Act and/or rules are analyzed and lucidly explained by the High Court, the assessee is able to understand the purpose of enactment of the relevant section or rule, as the case may be, and this should make the assessee wise enough to take remedial measures to safeguard his interest so that he is not caught unawares. The Bombay High Court in the case of CIT v. Jamnadas Virji Shares & Stock Brokers (P.) Ltd. [2012] 21 taxmann.com 27, after analyzing rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 (the ITAT Rules, 1963) has held that once an appeal before the Tribunal was withdrawn by assessee, in revenue’s appeal, assessee could support order of Commissioner of Income-tax (Appeals) only to that extent to which Commissioner of Income-tax (Appeals) allowed assessee’s claim and could not assail the order of Commissioner of Income-tax (Appeals) on grounds decided against it. The author, in this 632 August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 12 CA S. KRISHNAN article, has analyzed this decision of the Bombay High Court as also quite a good number of decisions to arrive at the conclusions. FACTS OF THE CASE AND DECISION OF AUTHORITIES INCLUDING TRIBUNAL 2. The assessee had made a claim towards bad debts to the tune of ` 28.69 lakhs under section 36(2) of the Income-tax Act (the Act). The Assessing Officer disallowed the entire claim. The Commissioner of Income-tax (Appeals), on first appeal, granted relief to the extent of ` 13.73 lakhs under section 36(2) of the Act while confirming the disallowance made by the Assessing Officer to the extent of ` 14.96 lakhs. Both, the revenue and the assessee, filed appeals before the Tribunal. The appeal filed by the assessee was, however, barred by limitation, as there was a delay of 551 days on the part of the assessee in preferring the appeal before the Tribunal. During the course
of the hearing before the Tribunal the assessee withdrew its appeal, but sought to press in aid the provisions of rule 27 of the ITAT Rules, 1963 to contend that the Commissioner of Incometax (Appeals) had erred in partly confirming the disallowance. The Tribunal vide its order dated 9 th September, 2011, while dismissing the appeal of the assessee with regard to admission of the appeal which was filed with a delay of 551 days as no sufficient cause was shown in filing the appeal belatedly, held that in the absence of relevant details being brought on record by the parties and in the interests of justice it was appropriate to remand the entire matter pertaining to the disallowance of ` 28.69 lakhs to the Assessing Officer. Accordingly, the order passed by the Assessing Officer on this account was set aside in its entirety by the Tribunal and the Assessing Officer was directed to decide the matter afresh in view of the decision of the Mumbai Special Bench in Dy. CIT v. Shreyas S. Morakhia [2010] 40 SOT 432. The Revenue filed an appeal before the High Court. ARGUMENTS PUT FORTH BY BOTH SIDES BEFORE THE HIGH COURT 3. The Revenue contended that as per rule 27 of the ITAT Rules, 1963 the assessee, as the respondent to the appeal filed by the Revenue, would be permitted to support the order passed by the Commissioner of Income-tax (Appeals) only on any of the grounds decided in favour of the assessee and not support order on the point(s) by taking recourse to the provisions of rule 27 of the ITAT Rules, 1963 where the assessee had withdrawn its appeal. It was submitted on behalf of the assessee that as the appeal was barred by limitation the assessee was advised to withdraw the appeal so that provisions of rule 27 of the ITAT Rules, 1963 could be pressed in aid and, accordingly, the assessee withdrew the appeal. DECISION OF THE HIGH COURT AND ITS BASIS 4. The High Court, in the instant case, extracted the relevant rule 27 of the ITAT Rules, 1963 which reads as under:- “27. Respondent may support order on grounds decided against him:- The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.” The High Court then referred to its earlier decision in the case of B.R. Bamasi v. CIT [1972] 83 ITR 223 (Bom.) wherein the Division Bench after noting an earlier judgment in CIT v. Hazarimal Nagji & Co. [1962] 46 ITR 1168 (Bom.) for the proposition that a respondent in an appeal is undoubtedly entitled to support the decree which is in his favour on any grounds which are available to him, even though the decision of the lower court in his favour may not have raised those grounds and observed that the powers of the Appellate Tribunal are similar to those of an Appellate Court under Order XLI rule 22 of the Code of Civil Procedure, 1908. The High Court made the following observations at para 12 of its order- “Once the appeal was withdrawn, it was only open to the assessee to support the order of the Commissioner (Appeals) on any of the grounds decided in its favour. Hence, while the assessee would support the order that would mean that the assessee would be entitled to urge that the deletion of the disallowance to the extent of ` 13.73 lakhs by the Commissioner (Appeals) was correct and proper, the assessee would not be entitled to avail of the benefit of the provisions of rule 27 in regard to that part of the order of the Commissioner (Appeals) which, upon consideration of the evidence, confirmed the disallowance of ` 14.96 lakhs made by the Assessing Officer.” August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 13 633
Page 3 and 4: August 1 to 15, 2012 u TAXMANN’S
Page 5 and 6: Accounts & Audit 701 707 FOUNDER ED
Page 7 and 8: INTRODUCTION Vodafone story - 1. On
Page 9 and 10: and the capital gains on transfer o
Page 11 and 12: used to introduce new rules of law,
Page 13: for earning tax exempt income. Howe
Page 17 and 18: (P.) Ltd.’s (supra) before the IT
Page 19 and 20: the ITAT Rules, 1946, vis-à-vis th
Page 21 and 22: Two recent instances of such practi
Page 23 and 24: ut CIT(A) are not bothered by any s
Page 25 and 26: say, twice the latter amount or mor
Page 27 and 28: Taxing the Expenditure on Litigatio
Page 29 and 30: PENALTY CHARGES FOR BREACH OF LAW C
Page 31 and 32: Exclusive Owner v. Joint Owner DIRE
Page 33 and 34: to agree with the assessee’s cont
Page 35 and 36: Retrospective Amendments - Courts D
Page 37 and 38: Court and if such party is still ag
Page 39 and 40: of the Act. It will not apply to de
Page 41 and 42: ank. It follows that if the amount
Page 43 and 44: This article aims to study various
Page 45 and 46: The true profits of the insurance b
Page 47 and 48: expenditure or allowance which is n
Page 49 and 50: the same have not yet been adopted
Page 51 and 52: 48. General Insurance Corpn. of Ind
Page 53 and 54: of income as declared by the assess
Page 55 and 56: NGOs undertake many kinds of charit
Page 57 and 58: in the above judgment observed that
Page 59 and 60: ground not raised earlier in appeal
Page 61 and 62: As per section 145 of the IT Act bu
Page 63 and 64: enhanced rates shown as receipts in
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a common passage, common kitchen, e
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The Tribunal concluded the decision
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ent free accommodation was not bein
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(c) Lease rental shall be paid at t
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of the above definition, the assess
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The High Court held in favour of as
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‘Approach road’ treated as a pa
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or any form in which such Director
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invests in a fair manner. Generally
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Disclosure of Borrowings under Revi
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RELEVANT GUIDANCE PROVIDED BY THE I
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5.1.3 Maturity profile of unsecured
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ACCOUNTS & AUDIT IN BRIEF A Fortnig
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cost savings, greater efficiency, i
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8.2 Summary - IESBA has released th
Page 95 and 96:
equirements but of late has receive
Page 97 and 98:
Gram Yojana. Additionally, other sc
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