Cwp/1089/2016 Of M/S Cairn India Ltd v. Deputy Commissioner Of Income Tax Circle Gurgoan And Anr

IN THE HIGH COURT OF PUNJAB AND HARYANAATCHANDIGARH CWP No.1089 of 2016Date of decision: 20.1.2016 M/s Cairn India Limited _ ceceee Petiti Deputy Commissioner of Income lax and another S.... Responde CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MRS. JUSTICEK RAJ RAHUL GARG 1. Whether Reporters of local papers may be allowed to see thejudgment? 2. To be referred to the Reporters or not? |YES3. Whether the judgment should be reported 1n the Digest? Present: Mr. C.S.Aggarwal, Sr. Advocate with| Mr. Prakash Kumar, Advocate, Mr. Ashim Aggarwal,Advocate and Mr. Pawan Kumar, Advocate for the petitioner. Ajay Kumar Mittal,J. ].The petitioner prays for quashing the impugned ordersdated 30.11.2015 and 20.2.2015, Annexures P.l and P.2 passed byrespondent No.2 in re-computing the book profit for the purpose ofMinimum Alternate Tax (MAT) under Section 115JB of the Income TaxAct, 1961 (in short, “the Act’) by increasing the book profit by making an addition of amount ofLT253.87 crores as depreciation in the profit CWP No. 1089 of 201 2DA tew tacts relevant for the decision of the controversyinvolved as narrated 1n the petition may be noticed. The petitionercompany - Cairn India Limited is a resident company incorporatedunder the Erstwhile Companies Act, 1956 on 21.8.2006. It is listed onBombay and National Stock Exchange of India. It 1s engaged in thebusiness of surveying, prospecting, drilling and exploring, acquiring,developing,producing,maintaining,refining,storing,trading/supplying, transporting, marketing, distributing, importing,exporting and generally dealing in minerals, oils, petroleum, gas andrelated byproducts and other activities incidental to the above. As partof its business activities, the petitioner company also holds interests inits subsidiary companies which have been granted rights to explore anddevelop oil exploration blocks in India. The petitioner companyentered into production sharing contracts (PSCs) in respect of certainblocks/oil and gas fields. In the revised return filed by the petitionercompany on 26.3.2013, it declared total income ofa417,20,94,924/-as per the provisions of the Act and adjusted book profit of ©=3505,76,69,697/- under section 115JB of the Act. The return wasprocessed under section 143(1) of the Act. The case was selected forscrutiny under the Act. During the course of assessment proceedings, areference was made by the Assessing Officer to the Transfer PricingOfficer (TPO) for determining Arm's length Price (ALP) under Section92CA(3) of the Act in respect of international transactions undertaken CWP No. 1089 of 201 dated 22.1.2015, the TPO proposed adjustment of |=a171,44,78,562/-under Section 92CA(3) of the Act. The petitioner filed various lettersbefore the Assessing Officer. The Assessing Officer in the draftassessment order dated 20.2.2015, Annexure P.2 in addition toaccepting the adjustments made by the TPO also proposed anadjustment of=n1,89,67,74,272/- to total income computed under theprovisions of the Act. Further, an amount of |=a2,69,22,99,920/- wasadjusted to book profits under section 115JB of the Act. The petitioneris only challenging action of respondent No.1 in proposing to increasebook profit by=a253,87,/6,138/- as a result of recomputation of bookprofit for the purpose of MAT under section II5JB of the ActThereafter, the petitioner filed objections to the legality of the draftassessment order before the Dispute Resolution Panel I, New Delhi(DRP) 1.e. respondent No.2 on 20.3.2015. Respondent No.2 vide orderdated 30.11.2015, Annexure P.1 under Section 144C(5) of the Actupheld the computation of book profit for the purpose of MAT made bythe Assessing Officer under section 115JB of the Act in the draftassessment order. Hence the instant writ petition by the petitioner. 3.We have heard learned counsel for the petitioner. |4 A perusal of the averments made in the petition shows thatbefore passing the assessment order, a reference was made to the TPO bythe Assessing Officer for determining ALP under section 92CA(3) of theAct in respect of international transactions undertaken by the petitionerduring the assessment year in question. Section 144C of the Act lays down CWP No. 1089 of 201 the procedure to be followed by the Assessing Officer before he can pass afinal assessment order. The DRP on receipt of objections by the assesseeunder section 144C(2) of the Act issues directions under section 144C(5) ofthe Act to the Assessing Officer to enable him to complete the assessment.In the present case, the TPO proposed adjustment of certain amount underSection 92CA(3) of the Act. After considering the reply submitted by theassessee, the Assessing Officer passed draft assessment order dated20.2.2015. In addition to adjustments proposed by the TPO, the AssessingOfficer also proposed adjustment of further amount to the total incomecomputed under the Act. The assessee filed objections before the DRP 1.e,respondent No.2 against the draft assessment order. The DRP upheld theorder passed by the Assessing Officer. It 1s well recognized that when aright or lability is created by a statute which gives a special remedy forenforcing it, the remedy provided by that statute only must be availed of. Inthe present case, after going through the narration of overall facts and theimpugned orders passed by the respondent authorities, we find and it 1s notdisputed by the learned counsel for the petitioner that the orders areappealable. Consequently, the petitioner should avail the alternative remedyof appeal against the orders passed by the authorities. 5.InTitaghur Paper Mills Co. Ltd. v. State of Orissa(1983) 2SCC 433, a three-Judge Bench of the Apex Court considered the questionwhether a petition underArticle 226of the Constitution should beentertained in a matter involving challenge to the order of the assessmentpassed by the competent authority under theCentral Sales Tax Act, 1956and corresponding law enacted by the State legislature and answered the Same in negative by making the following observations: "Under the scheme of the Act, there 1s a hierarchy of authoritiesbefore which the petitioners can get adequate redress against thewrongful acts complained of. The petitioners have the right toprefer an appeal before the Prescribed Authority under sub-section (1) ofSection 23of the Act. If the petitioners aredissatisfied with the decision in the appeal, they can prefer afurther appeal to the Tribunal under sub-section (3) ofSection 23of the Act, and then ask for a case to be stated upon a question oflaw for the opinion of the High Court underSection 24oft theAct.The Actprovides for a complete machinery to challenge anorder of assessment, and the impugned orders of assessment canonly be challenged by the mode prescribed by the Act and not bya petition under|Article 226of the Constitution. It 1; now wellrecognised that where a right or liability is created by a statutewhich gives a special remedy for enforcing it, the remedyprovided by that statute only must be availed of. This rule wasstated with great clarity by Willes, J. in Wolverhampton NewWaterworks Co. v. Hawkesford in the following passage: "There are three classes of cases in which a liability may beestablished founded upon statute. ... But there 1s a third class,viz. where a liability not existing at common law Is created bya Statute which at the same time gives a special and particularremedy for enforcing it. . .the remedy provided by the statutemust be followed, and it 1s not competent to the party topursue the course applicable to cases of the second class. Theform given by the statute must be adopted and adhered to." "There are three classes of cases in which a liability may beestablished founded upon statute. ... But there 1s a third class,viz. where a liability not existing at common law Is created bya Statute which at the same time gives a special and particularremedy for enforcing it. . .the remedy provided by the statutemust be followed, and it 1s not competent to the party topursue the course applicable to cases of the second class. Theform given by the statute must be adopted and adhered to." The rule laid down in this passage was approved by the House ofLords 1nNeville v. London Express Newspapers Ltd_ and hasbeen reaffirmed by the Privy Council 1n|Attorney-General ofTrinidad and Tobago v. Gordon Grant & Co. Ltd.andSecretary of State v. Mask & Co.Ithas also been held to beequally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was thereforejustified in dismissing the writ petitions 1n limine." 6.Following the above judgment, the Apex Court inAssistantCollector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others(1985) 1 SCC 260 observed as under: EArticle 2261s not meant to short-circuit or circumvent statutoryprocedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as forinstance where the very vires of the statute 1s in question orwhere private or public wrongs are so inextricably mixed up andthe prevention of public injury and the vindication of publicJustice require it that recourse may be had toArticle 226of theConstitution. But then the Court must have good and sufficientreason to bypass the alternative remedy provided by statute,Surely matters involving the revenue where statutory remediesare available are not such matters. We can also take judicialnotice of the fact that the vast majority of the petitions underArticle 226of the Constitution are filed solely for the purpose ofobtaining interim orders and thereafter prolong the proceedingsby one device or the other. The practice certainly needs to bestrongly discouraged." Ty.This Court 1nLarsen and Tfoubro Limited yv. The State Haryana and others&2012(2) 166 PLR 345, considering the question ofentertaining writ petition where alternate statutory remedy was available,had in paras 6 and 7 observed thus :- “6.The following are the broad principles when a writpetition can be entertained without insisting for adoptingstatutory remedies:- 1) where the writ petition seeks enforcement of any of thefundamental rights;fundamental rights; 11) where there 1s failure of principles of natural justice; or 111) where the orders or proceedings are wholly without Jurisdiction or the vires of an Act 1s challenged. 7. We are not inclined to entertain this petition against theassessment order as it does not fulfil any of the broad outlinesnoticed herein above.....’’ § Learned counsel had sought support from pronouncements inState ofAndhra Pradesh vs. PV.Hanumantha Rao (D) through Lrs andanother,(2003) 10 SCC 121 andSamsung India Electronics Pvt. Limitedvs. Dy. Commissioner of income fax, Circle 7(1) and others,(2014) 362ITR 460 (Delhi) to countenance that inspite of alternative remedy writpetition was maintainable. In view of the factual matrix and availability ofalternative efficacious remedy to the petitioner, no advantage can bederived by the petitioner therefrom.9 Reliance was also placed upon the judgments 1nCommissioner Jurisdiction or the vires of an Act 1s challenged. 7. We are not inclined to entertain this petition against theassessment order as it does not fulfil any of the broad outlinesnoticed herein above.....’’ § Learned counsel had sought support from pronouncements inState ofAndhra Pradesh vs. PV.Hanumantha Rao (D) through Lrs andanother,(2003) 10 SCC 121 andSamsung India Electronics Pvt. Limitedvs. Dy. Commissioner of income fax, Circle 7(1) and others,(2014) 362ITR 460 (Delhi) to countenance that inspite of alternative remedy writpetition was maintainable. In view of the factual matrix and availability ofalternative efficacious remedy to the petitioner, no advantage can bederived by the petitioner therefrom.9 Reliance was also placed upon the judgments 1nCommissioner of Income Tax vs. Appollo Tyres Limited,(1999) 237 ITR 706 (Ker.),Apollo Tyres Limited vs. Commissioner ofIncome Tax, Kochi,(2002)245ITR 273 (SC),MalayalaManorama Co. Limited vs. Commissioner ofIncome Tax, Trivandrum, (2008) 300 ITR 251 (SC), |Maruti Suzuki IndiaLimited ys. Additional Commissioner of Income Tax Transfer Pricingofficer,(2010) 328 ITR 210 (Delhi) to assail the impugned orders on merit.The propositions of law enunciated in these pronouncements areunexceptionable. However, as we have refrained from entertaining the writpetition on the ground of availability of efficacious alternative remedy tothe petitioner, it 1s not considered appropriate to express any opinionregarding the applicability or otherwise of these judgments to the presentCaSc. CWP No. 1089 of 201 10.Relegating the petitioner to avail alternative remedy under theAct, we are not inclined to entertain this petition in writ jurisdiction underArticle 226 of the Constitution of India. Consequently, the petition stands|dismissed. Needless to say, anything observed herein before shall not betaken to be an expression of opinion on the merits of the controversy. (Ajay Kumar Mittal)svudge January 20, 2016@7#@ (Raj Rahul Garg)sudge