Ita/47/2015 Of The Commissioner Of Income Tax v. M/S Flytxt Technology P. Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU TUESDAY, THE 10TH DAY OF OCTOBER 2017/18TH ASWINA, 1939 ITA.No. 47 of 2015 () ---------------------- AGAINST THE ORDER IN ITA 97/2014 of I.T.A.TRIBUNAL,COCHIN BENCH DATED APPELLANT:---------- THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: --------------------- M/S FLYTXT TECHNOLOGY P. LTD. TECHNOPARK CAMPUS, KARIAVATTOM, THIRUVANANTHAPURAM 695 581. R1 BY ADV. SRI.V.ABRAHAM MARKOS R1 BY ADV. SRI.ABRAHAM JOSEPH MARKOS R1 BY ADV. SRI.ISAAC THOMAS R1 BY ADV. SRI.HARAN THOMAS GEORGE R1 BY ADV. SRI.GOVIND VIJAYAKUMARAN NAIR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10-10-2017 ALONG WITH ITA No.77/2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA No.47/2015 APPENDIX APPELLANT'S ANNEXURES: ANNEXURE ATRUE COPY OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT OFTHE ASSESSING OFFICR DTD.17.12.2012. ANNEXURE BTRUE COPY OF THE ORDER U/S 263 OF THE INCOME TAX ACT OF THECOMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM DTD.22.1.2014. ANNEXURE CORDER OF THE ITAT IN ITA NO.97/COCH/2014, FOR THE AY 2010-2011 DTD. 28.8.2014 TRUE COPY P.S.TO JUDGE Antony Dominic & Dama Seshadri Naidu, JJ. -------------------------------------------------- ITA Nos.47 and 77 of 2015 -------------------------------------------------- Dated this the 10[th] day of October, 2017 JUDGMENT Antony Dominic, J. These appeals are filed by the revenue challenging thecommon order passed by the Income Tax Appellate Tribunal,Cochin Bench in ITA No.97 of 2014 and 39 of 2014 respectively,concerning the assessment year 2010-2011. By the said order, theTribunal directed the Assessing Officer to consider the claim of theassessee for the benefit of Section 10A of the Income Tax Act. 2. We heard the learned Senior Counsel for the revenue andthe learned Senior Counsel appearing for the respondent assessee. 3. The facts of the case are that the the assessees in these cases,claiming to the benefit of Section 10B was allowed by the AssessingOfficer and on that basis the assessment was completed. However,the Commissioner of Income Tax invoked his jurisdiction under ITA No.47& 77 of 2015 2 Section 263 of the Act on the ground that the assessment orderswere erroneous and prejudicial to the interest of the revenue. Beforethe Commissioner, the assessees raised an alternative contentionthat they were entitled to the benefit of Section 10A. However, inthe order passed the Commissioner did not consider the claim ofthe assessees for the benefit of Section 10A and instead directed theAssessing Officer to withdraw the exemption under Section 10B.This order was challenged by the assessees in the appeals filed bythem before the Tribunal. The appeals were disposed of by theTribunal directing to decide the issue afresh including the claim ofthe assessee for the benefit of Section 10A. It is this common orderwhich is under challenge and common questions of law framed readas under: 1. Whether, on the facts and in the circumstances of the caseand while exercising suo moto revision of an assessment orderby the Commissioner, is the assessee entitled to raise analternative claim before the Commissioner? 2. Whether, on the facts and in the circumstances of the caseand while setting aside the claim of the assessee under Sec.10Berroneously allowed by the Assessing Officer, the assessee is ITA No.47& 77 of 2015 3 entitled to alternatively claim a deduction Section 10A beforethe Commissioner under Section 263 of the Income Tax Act? 3. Whether, on the facts and in the circumstances of the caseand in the light of the grounds raised is the interference of theTribunal with the suo moto revisional order of Commissioneragainst law? 4. According to the learned Senior Counsel for the revenue, 2. Whether, on the facts and in the circumstances of the caseand while setting aside the claim of the assessee under Sec.10Berroneously allowed by the Assessing Officer, the assessee is ITA No.47& 77 of 2015 3 entitled to alternatively claim a deduction Section 10A beforethe Commissioner under Section 263 of the Income Tax Act? 3. Whether, on the facts and in the circumstances of the caseand in the light of the grounds raised is the interference of theTribunal with the suo moto revisional order of Commissioneragainst law? 4. According to the learned Senior Counsel for the revenue, the Commissioner having found that the benefit of section 10Bgranted to the assessee being erroneous and prejudicial to theinterest of the revenue, it was not opened to the assessee to claim thebenefit of Section 10A either before the Commissioner or theTribunal. In support of this plea, the counsel placed reliance in thejudgment of the High Court of Delhi in Commissioner of IncomeTax v Regency Creations Ltd. (2013) ITR 326. However, thiscontention of the learned senior counsel for the revenue wascontradicted by the learned senior counsel appearing for theassessees and according to him, the assessees could not have beendeprived of the statutory benefit it was entitled to under section 10Aon the ground that it had made a wrong claim under Section 10B. ITA No.47& 77 of 2015 4 5. Counsel invited our attention to the judgment of the ApexCourt in National Thermal Power Co.Ltd. v Commissioner ofIncome Tax (1998) 229 ITR 383 laying down that it was opened tothe parties to raise for the first time the questions having a bearingon tax liability of the assessee before the Tribunal. The learnedsenior counsel also brought to our notice the order of the Tribunalclarifying the judgment in the case of Regency Creations (supra)giving liberty to the assessees to claim the benefit of Section 10Aafter the court upheld the rejection of claim under Section 10B.6. We have considered the submissions made. Admittedly, theassessee initially claimed the benefit of Section 10B which wasallowed by the Assessing Officer. Only when the Commissioner wasseized of the proceedings under Section 263, the assessee raised analternative claim for the benefit of Section 10A. The Commissionerdid not examine that plea and on the other hand, directed theAssessing Officer to withdraw the exemption under Section 10B. Itwas this order which was challenged by the assessees in the appeals ITA No.47& 77 of 2015 5 filed by them before the Tribunal. Such an appeal filed by theassessee is liable to be considered by the Tribunal exercising itspower under Section 254 of the Act which obliged the Tribunal toconsider the appeal and pass such orders thereon as it thinks fit. Itwas this power of the Tribunal which was considered by the ApexCourt in NTPC's case (supra) which held that where the Tribunal isonly required to consider the questions of law arising from the factswhich are on record, there is no reason why such a question shouldnot be allowed to be raised when it is necessary to consider thatquestion in order to correctly assess the tax liability of an assessee.Even if the contention raised by the learned Senior Counsel for therevenue that the power conferred on the appellants under Section263 only authorised him to examine whether the order passed bythe Assessing Officer is erroneous and prejudicial to the interest ofthe revenue, that restriction of power cannot affect the powers ofthe Tribunal which is bound to exercise under Section 254 of theAct. In such a situation, having regard to the language of Section ITA No.47& 77 of 2015 6 254 and as interpreted by the Apex Court in NTPC's case (supra),we do not see any reason to think that the Tribunal has committedan illegality by directing the Assessing Officer to decide the matterafresh duly adverting to the claim of the assessee for the benefit ofSection 10A. ITA No.47& 77 of 2015 6 254 and as interpreted by the Apex Court in NTPC's case (supra),we do not see any reason to think that the Tribunal has committedan illegality by directing the Assessing Officer to decide the matterafresh duly adverting to the claim of the assessee for the benefit ofSection 10A. 7. Though the learned Senior Counsel for the revenue reliedon the judgment of a Delhi High Court in Regency Creations Ltd.(supra), a reading of the judgment shows that the Delhi High Courtset aside the order of the Tribunal granting the benefit of Section10B to the assessee therein. However, the subsequent order passedby the Delhi High Court, a copy of which has been made availableby the learned senior counsel appearing for the assessee, shows thatthe High Court itself directed that when the matter is reconsideredby the Tribunal as directed in the judgment above, the Tribunalshall examine the claim of the assessee for the benefit of Section10A. Therefore, in fact, this order of the Delhi High Court supportsthe claim of the assessee. ITA No.47& 77 of 2015 7 In the aforesaid circumstances, we do not find any illegality inthe order passed by the Tribunal. Therefore, the questions of lawframed have to be answered in favour of the assessee and against therevenue. Accordingly, the appeals are dismissed. css/ Sd/- Antony Dominic, Judgesd/- Dama Seshadri Naidu, Judge true copy P.S.TO JUDGE