Ita/76/2002 Of Commissioner Of Income Tax v. Hindustan Zinc Ltd

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- COMMISSIONER OF INCOME TAX HINDUSTAN ZINC LTD Mr. KK BISSA, for the appellant / petitioner Mr. ANJAY KOTHARI, for the respondent Date of Order : 21.11.2007 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI MUNISHWAR NATH BHANDARI,J. This appeal has been filed by the Revenue againstthe judgment of the Income Tax Appellate Tribunal dt.30.10.2001 under Section 260A of the Income Tax Act. This appeal was admitted on 29.1.2003 by framingthe following substantial question of law:- “Whether on the fact and in the circumstances ofthe case the ITAT was justified in law indirecting the assessing officer to allow thededuction of Rs. 4,13,37,165/- disallowed by himu/s 40(a) of the Income-tax Act and confirmed bythe CIT(A) out of the claim of the assessee U/s 35AB amounting to Rs. 8,10,37,633/- ignoring thefacts and material brought on record?” Arguing the appeal it was contended by the learnedcounsel for the appellant that in para-15 after taking into account the stipulations contained in the agreement betweenthe assessee and the contractor which agreement was enteredon 28.2.87 that the amount was payable by the assessee tothe contractor, and negativing the contention of theassessee it was held as under:- “We, therefore, reject this contention of thelearned counsel for the assessee and held that theliability in respect of fees for technicalservices provided by M/s DML to the assesseecompany had actually accrued as per the terms andconditions of the agreement entered into by thesetwo parties.....” Prior to this it has also been held as under:- “In that view of the matter, we find no merit inthe contention of the learned counsel for theassessee that the fees was never payable by theassessee company to M/s DML and, therefore, theincome from the same having not been deemed toaccrue or arise in India within the meaning ofSection 9(1)(vii), was not chargeable under theIncome-tax Act, 1961.” As against this while passing the impugned order,in para-18 the learned Tribunal has arrived at diametrically contrary finding by holding as under:- “From the perusal of the above, it is evident thatthe amount of fees for technical services wasnever payable by the assessee company to M/s DMLoutside India.” It appears that while recording this finding inpara-18, the learned Tribunal went into the question of manner and method of making payment agreed upon between theconcerned parties. It is contended that as a matter of factfrom the record it is clear that the amount was payable bythe assessee to M/s. DML outside India, and therefore, thededuction could not be allowed in view of the provisions ofSection 40(a). On the other hand, learned counsel for therespondent submits that in view of the clear finding asrecorded in para-18 the deduction was rightly granted, andthe finding as recorded in para-15 are not the finding tothe effect that the amount was payable by the assessee toM/s. DML outside India. According to learned counsel, it isclear on record that the amount was to be paid to theassessee to the Government of India, and thereafter whatwas to be done by the Government of India is not concernedwith the assessee rather the amount was paid to DML byCrown Agents from out of the grant made by the U.K.Government, and therefore, the findings recorded in para-18do not require any interference by this Court. We have considered the submissions, and have gonethrough the impugned judgment. In our view, it is more than clear from the abovequoted portions of the judgment of the learned Tribunalthat wholly irreconcilably contrary findings have been We have considered the submissions, and have gonethrough the impugned judgment. In our view, it is more than clear from the abovequoted portions of the judgment of the learned Tribunalthat wholly irreconcilably contrary findings have been recorded by the learned Tribunal in para-15 and 18, andtherefore, instead of going into the merits of the questionas to whether the assessee is entitled to deduction underSection 35AB, or that it is disentitled to deduction byvirtue of provisions of Section 40(a) as it then existedfor the relevant period, we think it appropriate to setaside the impugned judgment, and send the matter back tothe learned Tribunal to consider the matter afresh afterhearing both the parties, and thereafter arrive at acategorical conclusion as may be deducable from the recordand in accordance with law. The parties are directed toappear before the learned Tribunal on 17.12.2007. Obviouslysince the matter is very old, the learned Tribunal isexpected to decide the matter most expeditiously. Accordingly, the appeal is allowed. The impugnedjudgment of the learned Tribunal is set aside, and thematter is remitted back to the Income Tax AppellateTribunal as above. ( MUNISHWAR NATH BHANDARI ),J. ( N P GUPTA ),J. /sushil/