Commissioner Of Income Tax-3, Mumbai v. M/S. Nikhil Investment Company Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL (LODG.) NO.3006 OF 2009 Commissioner of Income Tax-3, MumbaiVs.M/s. Nikhil Investment Company Pvt. Ltd. ..Appellant. ..Respondent. .... Mr. Vimal Gupta for the Appellant.Mr. J.D.Mistry with Mr. Raj Darak and Mr. P.C. Tripathi for the Respondent. .... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. P.C.: th March, 2010. 15 1.The appeal by the Revenue under Section 260-A of the Income Tax Act, 1961 raises the following three questions : “A.Whether on the facts and in the circumstances of the case and in law the Hon’ble Tribunal was right in quashing the Order of the Commissioner of Income Tax passed u/s.263 of the Income Tax Act? B.Whether on the facts and circumstances of the case and in law, the Hon’ble Tribunal was correct in holding that the assessee is entitled for deduction u/s. 80M of the Income Tax Act amounting to Rs.2,17,62,000/- in respect of the dividend distributed after 31-03-2003? C.Whether on the facts and circumstances of the case and in law, the Hon’ble Tribunal was right in ignoring the non-obstante clause in Section 115-O which clearly restricts the applicability of Section 80M?” 2.During the course of the submissions, counsel appearing on behalf of the Revenue has stated that questions B and C would not arise for determination on the order passed by the Tribunal and it is only question A which is pressed. 3.The issue in the present case arises out of an order passed by the Commissioner of Income Tax under Section 263, seeking to reopen the assessment. Two grounds were furnished in the order of the Commissioner dated 1st February, 2008 in coming to the conclusion that the order of assessment was erroneous and prejudicial to the interest of the Revenue. The first ground was that the assessee had distributed a dividend on 30th June and 22nd September, 2003 which was after the due date which according to the Commissioner of Income was 1st April, 2003 and hence the deduction under Section 80-M was not admissible. The second reason is that Section 115-O was on the statute book during Assessment Year 2003-04 and that under sub section (5) of the provision no deduction under any other provision could be allowed to a company or shareholder in respect of dividend declared, distributed or paid by a domestic company after 1st April, 2003. 4.The Tribunal while setting aside the invocation of powers under Section 263 relied on its own decision in the case of Nirupama Traders Private Limited in ITA No.1701/M/08. In Nirupama Traders the Tribunal had held that two views were possible on the interpretation of the provisions of Section 80-M and 115-O and that consequently having regard to the judgment of the Supreme Court in the case of Malabar Industrial Company Limited[1], the order of the assessing officer could not be treated as erroneous or prejudicial to the interest of the Revenue. The Tribunal also relied upon the judgment of this Court in the case of Saumya Finance and Leasing Pvt. Ltd. (ITA 56/2005 decided on 23rd January, 2008). Apart from the fact that the Tribunal held that two views were possible, it also 1243 ITR 83 noted during the course of its discussion that the assessing officer had issued a detailed questionnaire to which the assessee had furnished a reply along with relevant evidence and that consequently exercise of the jurisdiction under Section 263 was not warranted. In view of the reasons which have weighed with the Tribunal, we do not find that this appeal would raise any substantial question of law. The view of the Tribunal that recourse to Section 263 would not be warranted where two views are possible is consistent with the law laid down by the Supreme Court. We therefore do not find any merit in the appeal. The appeal is dismissed. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)