Sesa Goa Limited, Sesa Ghor, 20 Edccomplex, Patto, Panjim, Goa 403 001 v. The Additional Commissioner Of Income-Tax,….Range 1, Panaji, Goa

1 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 24 OF 2011 Sesa Goa Limited, Sesa Ghor, 20 EDCComplex, Patto, Panjim, Goa 403 001. …. Appellant Versus The Additional Commissioner of Income-Tax,….Range 1, Panaji, Goa. Respondent *** Mr. R.G. Ramani, Senior Advocate with Mr. Pranav Shenvi Kakodkar,Advocate for the Appellant. Ms. Susan Linhares, Standing Counsel for the Respondent. Coram:- M.S. SONAK & SMT. M.S. JAWALKAR, JJ. thDate:- 12 March, 2020 ORAL JUDGMENT: (Per M. S. Sonak, J.) Heard Mr. Ramani, the learned Senior Counsel along withMr. Pranav Kakodkar, the learned Counsel for the appellant and Ms.Susan Linhares, the learned Standing Counsel for the respondent. 2.This Appeal was Admitted vide order dated 25.01.2012 onthe following substantial questions of law: (1)Whether in the facts and in the circumstances ofthe case and in law and in the light of Circular No.the case and in law and in the light of Circular No. 14 (XL-35) of 1955 dated 11th April, 1955 issued 2 by the Central Board of Direct Taxes, the AssessingOfficer is duty bound to consider a claim fordeduction under Section 10B of the Act madeduring the assessment proceedings ? (2)Whether on the facts and in the circumstances ofthe case and in law and without prejudice, theCommissioner of Income-tax (Appeals) in exerciseof his plenary/co-terminus powers ought to haveentertained the claim for deduction under Section10B of the Act as all necessary facts were already onrecord ?the case and in law and without prejudice, theCommissioner of Income-tax (Appeals) in exerciseof his plenary/co-terminus powers ought to haveentertained the claim for deduction under Section10B of the Act as all necessary facts were already onrecord ? (3)Whether on the facts and in the circumstances ofthe case and in law and without prejudice, theTribunal ought to have entertained the claim fordeduction under Section 10B of the Act as allnecessary facts were already on record ?the case and in law and without prejudice, theTribunal ought to have entertained the claim fordeduction under Section 10B of the Act as allnecessary facts were already on record ? (4)Whether sub-Section (5) of Section 80A of the Actas inserted by the Finance (No.2) Act, 2009 withretrospective effect from 1st April 2003 should beinterpreted so as (i) to have only prospective effectand/or (ii) not to adversely affect vested rightsexisting on the date of enactment of the Finance(No.2) Act, 2009 ?as inserted by the Finance (No.2) Act, 2009 withretrospective effect from 1st April 2003 should beinterpreted so as (i) to have only prospective effectand/or (ii) not to adversely affect vested rightsexisting on the date of enactment of the Finance(No.2) Act, 2009 ? 3.In this Appeal, we are concerned with assessmentproceedings for the assessment year 2005-06. The appellant filedincome tax returns for this assessment year declaring income ofRs.609,37,94,550/- and revised returns declaring income of 3 Rs.609,31,94,550/- respectively. However, it is the case of theappellant that the appellant inadvertently omitted to make claim fordeduction under Section 10B of the Income Tax Act, 1961 (IT Act) inrespect of two 100% of Export Oriented Undertakings referred to as“Cudnem Unit” and the “Gadia Sodo – Codli Unit”, which accordingto them, was eligible for deduction under Section 10B of the IT Act. 4.The appellant, during the assessment proceedings, filedletters dated 22.10.2008 and 01.12.2008, claiming for deductionunder Section 10B of the IT Act in respect of the aforesaid units. TheAssessing Officer vide assessment order dated 16.12.2008, however,refused to consider this claim for deduction, on the ground that suchclaim was not raised by filing the revised returns. 3 Rs.609,31,94,550/- respectively. However, it is the case of theappellant that the appellant inadvertently omitted to make claim fordeduction under Section 10B of the Income Tax Act, 1961 (IT Act) inrespect of two 100% of Export Oriented Undertakings referred to as“Cudnem Unit” and the “Gadia Sodo – Codli Unit”, which accordingto them, was eligible for deduction under Section 10B of the IT Act. 4.The appellant, during the assessment proceedings, filedletters dated 22.10.2008 and 01.12.2008, claiming for deductionunder Section 10B of the IT Act in respect of the aforesaid units. TheAssessing Officer vide assessment order dated 16.12.2008, however,refused to consider this claim for deduction, on the ground that suchclaim was not raised by filing the revised returns. 5.The assessee appealed to the Commissioner of Income Tax(Appeals), who, called for a remand report from the Assessing Officer.This remand report was furnished by the Assessing Officer on23.03.2010. The Commissioner of Income Tax (Appeals) afteraffording an opportunity of hearing to the parties, passed judgmentand order dated 31.03.2010, upholding the order made by theAssessing Officer regards non consideration of the claim for deductionunder Section 10B of the IT Act. 4 6.The relevant portion of appellate order dated 31.03.2010is to be found in para 6.7, which reads as follows: “6.7 The AO has also mentioned that the assessee has allalong been claiming deduction uls 8OHHC in respect ofthe exports made by EOUs and it is only in the tenth yearthat it has chosen to claim deduction u/s 10B. Soconsistency in claiming deduction is also absent in theappellant’s case. Notwithstanding the above facts, theappellant has not claimed the deduction uls 103 in respectof its two 100% EOUs neither in the original return nor inthe revised return and subsequent claim for deduction u/s10B is an after thought which cannot be entertained inview of the reasons given above and relying on variousdecisions discussed above. Hence, without going into themerits of the appellant’s claim that extraction andprocessing of iron ore amounts to production, the claim isnot admissible as the appellant has not made the claim insthe original or revised returns. Accordingly, appellant‘claim uls 10B is rejected.” 7.The appellant-assessee, then, appealed to the Income TaxAppellate Tribunal (ITAT), which too, vide judgment and order dated10.03.2011upheld the order of the Appellate Authority. 8. The relevant discussion in the ITAT's order dated 10.03.2011 is to be found in para 11, which reads as follows: 11. We have heard the rival contentions of both theparties. The learned Authorised Representative submittedthat extraction and processing of iron ore amounting to 5 production prior to A.Y. 2005-06, the deduction underSection 10B was not claimed by the assessee. The assesseewas claiming deduction under Section 8OHHC. Thelearned Authorised Representative submitted that theclaim of 100% EOU has not been mentioned in theoriginal return. The assessee is entitled for such claim,when the assessee has filed revised return, the assessee hasnot made this claim. The CIT(A) has not allowed theclaim on the decision relying on the decision of Hon'bleSupreme Court in the case of Goetze (India) Ltd. Vs. CIT284 ITR 323 wherein the Court has held that when anassessee has claimed deduction after return has been filed,the assessing authority has no power to entertain suchclaim made otherwise than by way of revised return.Respectfully following the decision of Hon'ble SupremeCourt, we are of the view that CIT(A) is justified in notallowing the claim of deduction otherwise by then therevised return. Therefore in our opinion, learned CIT(A) isjustified in his action and our interference is not required.This ground of appeal raised by the assessee is dismissed. 9.The first substantial question of law, to a certain extent,can be said to be covered by the decision of the Hon'ble Apex Court inthe case of Goetze (India) Ltd. Vs. Commissioner of Income Tax[2006] 284 ITR 323 (SC). However, according to us, both, theCommissioner of Income Tax (Appeals) and the ITAT have erred inrelying upon Goetze (India) Ltd. (supra) and holding that even theAppellate Authorities under the IT Act could not have entertained theassessee's claim for deduction, inter alia, under Section 10B of the ITAct. 6 10.According to us, the approach of the Commissioner of theIncome Tax (Appeals) and the ITAT is contrary to the law laid downby this Court in Commissioner of Income Tax Vs. Pruthvi Brokers& Shareholders P. Ltd., [2012] 349 ITR 336 (Bom), whichdecision has been followed in Tax Appeal No. 17 of 2013 and TaxAppeal No. 18 of 2013 decided on 28.02.2020, wherein it has beenheld thus: 39. In CIT Vs Pruthvi Brokers & Shareholders Pvt. Ltd.349 ITR 336, one of the questions of law which came tobe framed was whether on the facts and circumstances ofthe case, the ITAT, in law, was right in holding that theclaim of deduction not made in the original returns andnot supported by revised return, was admissible. TheRevenue had relied upon Goetze (supra) and urged thatthe ITAT had no power to allow the claim for deduction.However, the Division Bench, whilst proceeding on theassumption that the Assessing Officer in terms of law laiddown in Goetze (supra) had no power, proceeded to holdthat the Appellate Authority under the IT Act hadsufficient powers to permit such a deduction. In takingthis view, the Division Bench relied upon the Full Benchdecision of this Court in Ahmedabad Electricity Co. LtdVs CIT 199 ITR 351 to hold that the AppellateAuthorities under the IT Act have very wide powers whileconsidering an appeal which may be filed by the Assessee.The Appellate Authorities may confirm, reduce, enhanceor annul the assessment or remand the case to theAssessing Officer. This is because, unlike an ordinaryappeal, the basic purpose of a tax appeal is to ascertain thecorrect tax liability of the Assessee in accordance with law. 7 40. The decision in Goetze (supra) upon which reliance isplaced by the ITAT also makes it clear that the issueinvolved in the said case was limited to the power of the placed by the ITAT also makes it clear that the issueinvolved in the said case was limited to the power of theassessing authority and does not impinge on the powers of the ITAT under section 254 of the said Act. This means that in Goetze (supra), the Hon'ble Apex Court was not dealing with the extent of the powers of the appellate authorities but the observations were in relation to the powers of the assessing authority. This is the distinction drawn by the division Bench in Pruthvi Brokers (supra) as well and this is the distinction which the ITAT failed to note in the impugned order. 11.Revenue. Accordingly, the substantial questions of law at (2) and (3) are required to be answered in favour of the Assessee and against the 12.According to us, substantial question no. (4) as framed inour order dated 25.01.2012 does not arise or in any case, is notrequired to be decided at the present stage. This is because neither theCommissioner of Income Tax (Appeals) nor the ITAT have adverted tothe provisions of Section 80A(5) of the IT Act. There is no discussionas to whether this provision is required to be interpreted in order tohave prospective effect and/or not to adversely affect vested rightsexisting on the date of enactment of the Finance (No. 2) Act of 2009. 8 13.Similarly, at this stage, we are really not required to go intothe issue as to whether the activities undertaken by the appellant-assessee amounts to production or not, under Section 10B of the I.T.Act. 12.According to us, substantial question no. (4) as framed inour order dated 25.01.2012 does not arise or in any case, is notrequired to be decided at the present stage. This is because neither theCommissioner of Income Tax (Appeals) nor the ITAT have adverted tothe provisions of Section 80A(5) of the IT Act. There is no discussionas to whether this provision is required to be interpreted in order tohave prospective effect and/or not to adversely affect vested rightsexisting on the date of enactment of the Finance (No. 2) Act of 2009. 8 13.Similarly, at this stage, we are really not required to go intothe issue as to whether the activities undertaken by the appellant-assessee amounts to production or not, under Section 10B of the I.T.Act. 14.Both the aforesaid issues along with other issues, whichmay arise in the context of entitlement of the appellant/assessee's claimfor deduction under Section 10B of the I.T. Act will have to be decidedby the Commissioner of Income Tax (Appeals), which, in our opinion,has undoubted power to consider the claim for deduction in terms ofthe law laid down by this Court in Pruthvi Brokers (supra). 15.The circumstance that we have observed that the AppellateAuthorities have the power to consider the claim for deduction interms of Section 10B of the IT Act, is not to be construed as someobservations in the context of the provisions of Section 80A(5) of theIT Act. All that we have said is that generally, the AppellateAuthorities may not be justified in refusing to even consider theassessee's claim for deduction on the ground that such claim was notmade in the original returns or the revised returns filed before theAssessing Officer. If any contention based upon the provisions ofSection 80A(5) of the IT Act is raised by the Revenue, then, obviously,such contention will have to be considered by the Appellate Authority 9 in accordance with law. Further the appellant-assessee will have theliberty to meet such contentions, including by way of urging the verygrounds raised in the present Appeal on the aspect of prospectivity etc.We, therefore, clarify that we leave all such issues open for the decisionof the Commissioner of Income Tax (Appeals) and thereafter, if theneed be, the ITAT. 16.Accordingly, we answer the first substantial question of lawagainst the appellant and in favour of the respondent-Revenue.Further, we answer the second and the third substantial questions oflaw in favour of the appellant-assessee and against the respondent-Revenue. However, for reasons indicated earlier, we refrain fromanswering the fourth substantial question of law, leaving the same openfor the present. 17.Based upon the aforesaid, however, we set aside thejudgments and orders dated 31.03.2010 and 10.03.2011, made by theCommissioner of Income Tax (Appeals) and the ITAT respectively,insofar as they concern the issue of deductions under Section 10B ofthe IT Act and we restore the appellant-assessee's Appeal bearing ITANo. 158/PNJ/08-09 to the file of the Commissioner of Income Tax(Appeals) for fresh adjudication on the issue of deductions underSection 10B of the IT Act, in accordance with law and on its own 10 merits. 18. 18.We request the Commissioner of Income Tax (Appeals) todispose off the Appeal, which we have now restored to its file, asexpeditiously as possible and in any case, within a period of fourmonths from the date the parties appear and file the authenticatedcopy of this judgment and order. 19.We direct the parties to appear before the Commissionerof Income Tax (Appeals) on 07.04.2020 at 11:00 a.m. and fileauthenticated copy of this judgment and order. 20.The Appeal is disposed off in the aforesaid terms. Thereshall be no order as to costs. 21.All concerned to act on the basis of an authenticated copyof this Order. SMT. M. S. JAWALKAR, J. M. S. SONAK, J. EV