Director Of Income Tax (International Taxation v. M/S Samsung Heavy Industries Co

IN THE HIGH COURT OF UTTARAKHAND AT NAINITALIncome Tax Appeal No. 1 of 2013 Director of Income Tax (International Taxation). ..………. Appellant Versus M/s Samsung Heavy Industries Co. ..………. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. P.R. Mullick, Advocate for the respondent. JUDGMENT Coram: Hon’ble Ramesh Ranganathan, C.J. Hon’ble Alok Singh, J. Dated: 15[th] November, 2018 RAMESH RANGANATHAN, C.J. (Oral) Section 254(2A) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) stipulates that, in every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or sub-section (2) of Section 253. Under the first proviso thereto, the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of Section 253, for a period not exceeding one hundred and eighty days from the date of such order, and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order. Under the second proviso, where such appeal is not so disposed of within such period of stay as is specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so enhanced or allowed shall not, in any case, exceed three hundred and sixty-five days; and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed. Under the third proviso, if such an appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee. 2. Against the order passed by the Commissioner of Income Tax (Appeals), the assessee filed Income Tax Appeal No. 5103/Del/2011 for the Assessment Year 2008-09. They also filed Stay Application No. 133/Del/2012 in the said appeal. The Tribunal, by its order dated 13.07.2012, allowed the application of the assessee seeking stay, and directed stay of the outstanding demand for a period of six months from the date of the order or till the disposal of the appeal, whichever was earlier. 3. Contending that the Tribunal was disabled from extending the stay, as it would then fall foul of the third proviso to Section 254(2A) of the Act, the Revenue has come-up in appeal before this Court under Section 260A of the Act. The appellant placed reliance on a Division Bench judgment of this Court in Income Tax Appeal No. 31 of 2013 dated 20.03.2014, passed in the case of Director of Income Tax vs. M/s Seacor Offshore Dubai LLC, to contend that the Tribunal had exceeded its jurisdiction in extending the stay, granted earlier, for a further period of six months, contrary to the express stipulation in the third proviso to Section 254(2A) of the Act. 4. After the jurisdiction of this Court was invoked by the Revenue by way of the present appeal, which was admitted on 22.02.2013, the Income Tax Appellate Tribunal, by its order dated 27.09.2013, disposed of the main appeal pending before it aggrieved by which the assessee has invoked the jurisdiction of this Court in Income Tax Appeal No. 1 of 2014. 4. After the jurisdiction of this Court was invoked by the Revenue by way of the present appeal, which was admitted on 22.02.2013, the Income Tax Appellate Tribunal, by its order dated 27.09.2013, disposed of the main appeal pending before it aggrieved by which the assessee has invoked the jurisdiction of this Court in Income Tax Appeal No. 1 of 2014. 5. While Mr. P.R. Mullick, learned counsel for the respondent-assessee, would submit that, in the light of the final order passed by the Tribunal on 27.09.2013, the cause in this appeal does not survive necessitating adjudication by this Court on the merits of the appeal, Mr. Hari Mohan Bhatia, learned Senior Standing Counsel for Income Tax, would submit that, in the light of sub-sections (4) & (5) of Section 260A of the Act, this Court is bound to answer the questions of law, raised in the appeal, since the appeal was admitted on 22.02.2013. 6. The question, which arises for consideration, is whether this Court is bound to adjudicate the appeal preferred against an interlocutory order passed by the Income Tax Appellate Tribunal, and to examine its validity even after the main appeal has itself been disposed of by the Tribunal. 7. Section 260A of the Act relates to appeals to the High Court and, under sub-section (1) thereof, an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. Sub-section (3) of Section 260A stipulates that, where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. Sub-section (4) of Section 260A requires the appeal to be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such a question. Under the proviso thereto, nothing in sub-section (4) shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such a question. Under sub-section (5) of Section 260A, the High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. 8. While sub-section (3) of Section 260A requires the High Court, if it is satisfied that a substantial question of law is involved in any case, to formulate that question, sub-section (4) requires the High Court to hear the appeal only on that question, as also to permit the respondent to argue that the appeal does not involve such a substantial question of law. While the proviso to sub-section (4) enables the High Court to entertain the appeal on any other substantial question of law, not formulated by it, the High Court is obligated to give reasons therefor. Under sub-section (5), the High Court is required to deliver its judgment deciding the question of law so formulated. 9. The power of the High Court, to entertain an appeal under Section 260A of the Act, is available to be exercised only if the appeal gives rise to a substantial question of law. If the appeal does not give rise to any such question, then the High Court lacks jurisdiction to entertain the appeal. This does not, however, mean that, merely because the case involves a substantial question of law, the High Court is bound to determine the said substantial question of law arising in an appeal preferred against the interlocutory order passed by the Tribunal even though the main appeal, which was pending before the Tribunal when the appeal was preferred to this Court, has since been disposed of by the Tribunal as this Court would not, ordinarily, decide questions of law which are rendered academic in view of subsequent events. 10. In the present case, the appeal is preferred against an interlocutory order passed by the Tribunal, contending that such an interim order was passed in violation of the third proviso to Section 254(2A) of the Act. During the pendency of this appeal, the Tribunal disposed of the main appeal itself. As the interim order passed by the Tribunal would not survive after the main appeal has itself been disposed of, it is evident that the cause in the present appeal before us (which arose out of an interlocutory order passed by the Tribunal), does not survive necessitating any further adjudication by this Court. The mere fact that the appeal was admitted would not obligate this Court to decide academic questions, when the cause in the lis does not survive. 11. Suffice it, while dismissing the appeal as infructuous, to leave the question of law open for consideration in an appropriate case. G (Alok Singh, J.) 15.11.2018 (Ramesh Ranganathan, C. J.) 15.11.2018