Darashaw & Co. Pvt. Ltd v. The Deputy Commissioner Ofincome Tax – Range 4(1

rrpillai IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO. 772 OF 2014 The Commissioner of Income Tax-4 ..Appellant vsDarashaw and Co. Pvt. Ltd. ..Respondent WITH INCOME TAX APPEAL NO. 807 OF 2014 Darashaw & Co. Pvt. Ltd. ..Appellant vs. The Deputy Commissioner ofIncome Tax – Range 4(1) ..Respondent WITH WRIT PETITION NO. 1744 OF 2014 Darashaw & Co. Pvt. Ltd. ..Appellant vs. The Deputy Commissioner ofIncome Tax – Range 4(1) ..Respondent ........... Mr. A. R. Malhotra a/w. Mr. N. A. Kazi for the Appellant inITXA/772/2014 and for the Respondent in ITXA/807/2014. Mr. S. E. Dastur, Senior Advocate a/w. Mr. Madhur Agarwal for theRespondent in ITXA/772/2014 and for the Appellant in ITXA/807/2014. Mr. Suresh Kumar a/w. Ms. Samiksha Kanani for the Respondent inWP/1744/2014. ........... CORAM : S.C. DHARMADHIKARI A. K. MENON, JJ. DATE : 1[st] September, 2017 P.C.: 1.This Revenue appeal challenges an order passed by the Tribunal on12[th] June, 2013. The Revenue has proposed two questions of law andMr. Malhotra would urge that both are substantial questions of law.However, it is fairly conceded that as far as question no.4(A) is concernedthat pertains to dis-allowance by the Assessing Officer of Rs.1,24,22,472/- under section 14A of the Income Tax Act, 1961. In the lightof the order passed by this court in the assessee's Writ Petition no.1744/2014 and since this issue has been restored to the file of the IncomeTax Appellate Tribunal, Mr. Malhotra would contend that this Courtshould clarify that it will be open during the course of the fresh exercisebefore the Tribunal for the Revenue to contend that Rule 8D(3) of theIncome Tax Rules would also be relevant and will have a bearing on thecontroversy. 2.Since we have already remitted the matter back to the Tribunal andby keeping open all contentions, needless to clarify that the Revenue cancontend before the Tribunal Rule 8D(3) is also relevant for this issue andwill have bearing on the same. Equally it will be open for the assessee tourge that said Rule and its sub-rule cannot be relied upon. Even suchcontentions are open before the Tribunal for being raised by the parties. 3.Then Mr. Malhotra would submit that the question proposed asquestion no.4(B) at page 4 of the paper book is also substantial questionof law and that is already admitted by this Court in ITXA/1521/2012 on14[th] November, 2014. 4.On this point we have heard both Counsel. Since this point hasbeen admitted by this Court in the above appeal we admit this appeal onquestion no4(B). 5.With the consent of both sides we take up the appeal for hearingforthwith. 6.Mr Dastur, learned Senior Counsel appearing for the assessee wouldsubmit that there is no necessity of rendering any finding on this issue forthe simple reason that the issue is rendered academic. The Revenue hasnow issued circular and that circular says if the tax affect is below aspecified sum and namely Rs.25 lakhs, then, the appeals need not bepressed even if they are pending. 7.Mr. Dastur would submit that the tax effect as far as the abovequestion is concerned would be minimal. The amount in dispute is Rs.5,91,000/- and the tax effect would be much less. Therefore theRevenue's Circular should be relied upon by this Court to dismiss theappeal. On the other hand Mr. Malhotra would submit that it is theoverall impact and tax effect which has to be taken into consideration andone cannot pick up only this issue and consider it in isolation for applyingthe Revenue Circular. 7.Mr. Dastur would submit that the tax effect as far as the abovequestion is concerned would be minimal. The amount in dispute is Rs.5,91,000/- and the tax effect would be much less. Therefore theRevenue's Circular should be relied upon by this Court to dismiss theappeal. On the other hand Mr. Malhotra would submit that it is theoverall impact and tax effect which has to be taken into consideration andone cannot pick up only this issue and consider it in isolation for applyingthe Revenue Circular. 8.After hearing both sides and perusing the orders of the authoritiesunder the Income Tax Act we are of the opinion that since the appeal ITANo.456/Mum/2012 and ITA No. 660/Mum/2012 from which the WritPetition 1744 of 2014 arises has been restored to the file of the theIncome Tax Appellate Tribunal for disposal afresh on merits and inaccordance with law, the present appeal of the Revenue need not be keptpending limited to the above question no. 4(B). We are of the opinionthat interest of justice would be served if the order of the Tribunal is setaside as far as this issue is concerned as well and the Tribunal be directedto consider it afresh when the appeals as aforesaid are being decided. Wetherefore permit both sides to argue on the question of the claim ofprovision for “Mark to Market” loss and whether it was contingent asurged and whether it was crystallized at the end of the year and therefore not allowable as revenue deduction in the previous relevant year. Wekeep open all contentions of both sides even with regard to this issue. TheTribunal to decide this ground without being influenced by the earlierorder or any finding and conclusion therein. 9.The appeal is also allowed in the above terms but without any orderas to costs. (A. K. MENON, J.) (S.C. DHARMADHIKARI, J.)