Philips India Limited v. Principal Commissioner Of Incometax, Kolkata

OD-60 ITAT/238/2017 IA No.GA/1/2017 (Old No.GA/2214/2017) IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PHILIPS INDIA LIMITED -Versus- PRINCIPAL COMMISSIONER OF INCOMETAX, KOLKATA Appearance:Mr. J. P. Khaitan, Sr. Adv.Mr. Ananda Sen, Adv.Mr. A.K. Dey, Adv....for the appellant.Mr. P. K. Bhowmick, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA[[th]] Date : 17[[th]] November, 2021. The Court : This appeal of assessee filed under Section260A of the Income Tax Act (the ‘Act’ in brevity) is directedagainst the order dated 22[nd] February, 2017 passed by the IncomeTax Appellate Tribunal, C-Bench, Kolkata (the ‘Tribunal’) inmiscellaneous application in MA No.139/Kol/2016 arising out of ITANo.1545/Kol/2009 for the assessment year 2004-05. The assessee has raised the following substantialquestions of law for consideration : “I. Whether on the facts and in the circumstancesof the case, the order of the Tribunal is erroneous havingbeen perverse for not allowing the claim of the petitionerof lease rent paid as revenue expenditure under section37(1) of the Act on the pretext that the issue wasdebatable and that the case was not covered by thedecision of the Supreme Court in Re: ICDS Ltd. vs. CIT,when on the contrary all evidences and materials werepresent on record? II. Whether on the facts and in the circumstancesof the case, the order passed by the tribunal is erroneousin so far as it is perverse of having completely ignoredto abide by the well settled principle of law that noparty appearing before the Tribunal should suffer onaccount of any mistake committed by the Tribunal? III. Whether on the facts and in thecircumstances of the case, the order passed by theTribunal is erroneous as well as perverse in observingthat no express power of revenuw was conferred on theTribunal thereby ignoring the well settled principle oflaw that when prejudice results from an order attributableto the Tribunal’s mistake, error or omission, then it isthe duty of the Tribunal to set it right and suchatonement to the wronged party by the Tribunal has nothingto do with the concept of inherent power to review?” We have heard Mr. J.P. Khaitan, learned senior counsel forthe appellant/assessee and Mr. Bhowmick, learned standing counselfor the respondent/revenue. The assessee filed its Return of income tax for theassessment year under consideration (2004-05) and in the returnamongst other claims the assessee made claim for allowingdeduction of lease rental paid on cars taken on financial lease asa revenue expenditure. The return was selected for scrutiny andnotice under Section 143(2) was issued and subsequently therespondent issued notice under Section 142(1) of the Act alongwith a questionnaire seeking for certain clarifications. Theassessee submitted the requisite clarifications and sought tosustain the claim for deduction as being revenue expenditure underSection 37 of the Act. The assessing officer did not agree withthe assessee and completed the assessment under Section 143(3) ofthe Act by order dated 29[th] December, 2006. Aggrieved by such order, the assessee preferred appealbefore the Commissioner of Income Tax (Appeals) (CIT(A)). TheCIT(A) by an order dated 30[th] June, 2009 allowed the appeal andheld that the assessee is entitled for deduction. Aggrieved bythe same, the revenue preferred appeal before the tribunal. Inthe revenue’s appeal, the assessee made a specific submission byplacing reliance on the decision of the Supreme Court in ICDS Ltd.vs. CIT reported in 350 ITR 527(SC). The assessee submitted thatthe facts of the case in ICDS were identical to that of theassessee’s case and as the assessee had paid the lease rentaltowards cars taken on financial lease, they were entitled to claim Aggrieved by such order, the assessee preferred appealbefore the Commissioner of Income Tax (Appeals) (CIT(A)). TheCIT(A) by an order dated 30[th] June, 2009 allowed the appeal andheld that the assessee is entitled for deduction. Aggrieved bythe same, the revenue preferred appeal before the tribunal. Inthe revenue’s appeal, the assessee made a specific submission byplacing reliance on the decision of the Supreme Court in ICDS Ltd.vs. CIT reported in 350 ITR 527(SC). The assessee submitted thatthe facts of the case in ICDS were identical to that of theassessee’s case and as the assessee had paid the lease rentaltowards cars taken on financial lease, they were entitled to claim deduction. The submissions made before the tribunal were in atabulated form where it was also specifically pointed out as tohow the facts in the case of ICDS were identical to that of theassessee’s case. The tribunal by an order dated 11[th] May, 2016rejected the case of the assessee and allowed the revenue’s appealfollowing the earlier decision in the assessee’s own case for theassessment year 2003-04. In fact, the submission of the assesseebefore the tribunal was that there was a change of circumstancesin light of the decision of the Hon’ble Supreme Court in ICDSwhich requires to be considered and the assessee was entitled torelief.On a perusal of the order passed by the tribunal dated 11[th]May, 2016, more particularly from paragraphs 23, 24 and 25, wefind that the tribunal has not referred to the decision butproceeded solely based upon the order in the assessee’s own casefor the assessment year 2003-04. Subsequently, the assessee fileda miscellaneous petition under Section 254 of the Act stating thatthere was a mistake apparent from the records and the samerequires to be rectified. It was specifically pointed out thatthe assessee had submitted a summary of its arguments in course ofhearing on the grounds raised in the revenue’s appeal and thearguments were regarding the issue of allowability of paymentstowards the lease rental and stated that they specifically placedreliance on the decision of the Hon’ble Supreme Court in the case of ICDS. The assessee placed reliance on the decision of theHon’ble Supreme court in Assistant Commissioner of Income Tax vs.Saurashtra Kutch Stock Exchange Ltd. 305 ITR 227 for theproposition that non-consideration of a decision of thejurisdictional high court or the Hon’ble Supreme Court is amistake apparent from records. Those were the contentions raisedby the assessee before the tribunal. The tribunal was notinclined to accept the same and dismissed the miscellaneousapplication. Thus, aggrieved by both the orders passed in themain appeal by the tribunal dated 11[th] May, 2016 and the orderpassed in the miscellaneous application dated 22[nd] February, 2017which stood merged with the main order, the assessee is before us.The tribunal while rejecting the miscellaneousapplication, has made an observation in paragraph 5.3 of its orderdated 22[nd] February, 2017 that the issue which is raised by theassessee by placing reliance on the decision of the Hon’bleSupreme Court in ICDS is a debatable issue. We do not agree withthe findings arrived at by the tribunal because there was noadjudication by the tribunal at the first instance when it allowedthe revenue’s appeal by an order dated 11[th] May, 2016. In fact, wefind that the said decision was not even referred to though reliedupon by the assessee. Therefore, only after the issue wasconsidered on merits, the tribunal can take a stand that the issueis debatable and for doing so the tribunal should record the reasons as to what are the other decisions on the very same pointwhich may not support the case of the assessee. Therefore, wefind that the order rejecting the miscellaneous application filedby the tribunal is incorrect and calls for interference.Going back to the correctness of the order passed by thetribunal dated 11[th] May, 2016 by which the revenue’s appeal wasallowed, as pointed out earlier, the tribunal has not examined thefacts of the case qua the applicability of the decision of theHon’ble Supreme Court in ICDS (supra). This was required to bedone by the tribunal because the said decision of the Hon’bleSupreme Court came to be delivered after the order was passed bythe tribunal in assessee’s own case for the assessment year 2003-04. Therefore, the tribunal committed an error in observing thatthey need to take a consistent approach in the matter. The ruleof consistency requires to be interpreted on facts bearing in mindthe legal principle that each assessment year is an individualunit. Therefore, we are of the view that the matter requires tobe remanded to the tribunal to decide the issue relating to theclaim on account of allowability of deduction on the amount oflease rental paid by the assessee to the lessor.For the above reasons, the appeal is allowed and the orderpassed by the tribunal dated 22[nd]February, 2017 in MANo.139/Kol/2016 is set aside and consequently, the order passed bythe tribunal dated 11[th] May, 2016 is set aside in so far as the subject issue is concerned and the matter stands remanded to thetribunal to decide the claim of allowability of deduction. The assessee is at liberty to place all facts and legalsubmission before the tribunal. After hearing the assessee, thetribunal shall take a fresh decision on merits and in accordancewith law. The substantial questions of law are left open.The connected application stands closed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) A/s./S.Das.