Dismissed

Cit v. Hindustan Times Ltd.

Delhi HC4 Sept 2012ITA/350/2012

Case brief

AI extract

What is this about?

The Court upheld the Tribunal's order dismissing an appeal against a disallowance of loss set-off. It held that parliamentary intent regarding Section 67-A, 86, and 1678 was not clear given conflicting Tribunal views and post-amendment contexts, meaning no apparent error existed to warrant Section 263 revision.

What did the court decide?

The appeal was dismissed; no substantial question of law arose.

Cit Vs Hindustan Times Ltd. — Income Tax | Delhi HC (2012)

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Signature Not Verified Digitally Signed By:AM UL YA

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The facts of the^{case in brief for the purpose of this judgmentare that the} assessee, for the^{relevantyears, wasa member of an Association of Persons (AOP)} within the meaning^{of the expressionunder Section 2(31) deemedto be as such by} operation of section^{185 of the Act. Its share in the AoP had fluctuated for the} assessment^{years 1996-97to 2000-01.The AOP carried on two ventures' The} share ofthe^{assessee in respectofthetwo venturesdifferedfor each year; however} these shares were^{determinedshares at any point of tirne' Theassessments were} completed in^{the present case for the years 1998-99 and 1999-2000 accepting the} assessee,s claim^{that its sharein the loss of the AOP shouldbe set off against its} other income.^{Subsequently,the Cornmissionerof Income Tax, in exercise of his} power under Section^{263, sought to revise the assessmentcontendingthat the} orders of the^{Assessing Officer accepting the clairn were erroneous and prejudicial} to the interest of^{the Revenue'}

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The commissioner^{of Income Tax afterissuing a showcause notice} finalized the^{revision proceedings holding, inter alia,thatthe losses claimed by the} assessee i.e.,^{its share of the losses in the AoP claimed to be set off againstits} otherincome,hadbeenwronglyallowed.Indoingso,theCommissionerof Income Tax^{reliedon sections67-A as well as 1678. The commissioner of} Income Tax relied^{upon the decisionof the Bombay HighCourtin CIT vs Lalita} M. Bhat^{(lggs) 234 ITR 319. Theassesseecaried the matter in appeal' The} Tribunal by^{its impugned order reasonedthatthe Commissioner of Income Tax} could not have^{exercised the power of revision since the questionas to the} treatment of^{lossesof the AOP in the hands of the assesseewas debatable and more} than one view^{is plausible and merelybecausethe AO has adoptedone of the} plausible views^{it cannot be said that the assessmentwas erroneous andprejudicial} to the interest^{of the Revenue.}

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It is contended^{by Mr. Rajpal on behalf of the Revenuethat the Tribunal} fell into an^{effor and did not take into considerationthe clearprovisionsof} sections 67-4^{and 1678.It was submitted that the use of the expression "income"} in Section 86^{was highlysignificantandthe further enactment of the second}

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proviso to that Section,^{concluded the maffer in thatthe Parliamentclearly intended} that such losses^{could not be set off againstthe assessee'sother income under} various heads.

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Learned counsel^{for the respondent/assessee,on the other hand, submitted} that the Commissioner^{of Income Tax clearly fell into error in invokingthe} jurisdiction under Section 263 ofthe Act.^{It was emphasized that it is not every} mistake or error which^{is deemedto be prejudicialto the interestof the Revenue} that can be revised.^{Ifsuch was the position, it wouldbe open to the} Commissioner^{of IncomeTaxto revise everythird returnwhich is finalizedby the} Assessing Officer.^{Necessarily,the jurisdictionhas to be exercisedin such cases} oferrors as^{are clear and apparentfrom the record ofproceedings. The counselfor} 'Supr.n.I. the assessee relied^{upon the decisionof the} Court in Malabar^Industrial co. Lttt. vs. cIT^{(2000)243 ITR 83 and contendedthat the errof or mistake} should be beyond^{any debate.In other words,if the processof reasoningto discern} the effor or mistake^{is an elaborate oneor the pointis debatable or where conflicts} of view exist,^{the issuecannot be said to be erroneous so as to fall in the ambit of} Section 263.

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Learned counsel^{for the assessee submittedthat in any eventas to whether} losses fell within^{the expression "income" itself, has beendecided by the supreme} court in the^{decisions reportedas cIT vs Harprasad & co. P. Ltd.(1975) 99 ITR} 118 and cIT vs.^{J. H. Gotla (1935) 156 ITR 323 and that havingregardto the} conscious use of^{the word "loss"in Section67(2) oftheAct' Thequestionas to} whether the^{losses are inadmissible per se in the assessee'shands wasundoubtedly} debatable in^{the circumstancesof this case,as indicated by the following orders} passed by different^{Benchesof the Tribunaland taking divergentviews:-}

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(r) Mahinelra Hotdings^{and Finance Ltd. vs. DCIT (2009)311 ITR (A'T)} 0001Bom;

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(ir) Birla Tyres^{Vs- Joint CIT (2004) 267 ITR (A'T)0001 Cal;}

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(i|f; Metro Exports^{P. Ltd. Vs. DCIT3 SOT 566 (Munl;}

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(iv) Suttei Industries^{Ltd.Vs. ACIT(2009) 31 SOT26 (Del)}

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This Court is of^{the opinion that the Tribunal's reasoningin the impugned} judgment cannot be faulted. An overall^{analysisof the three provisions i.e.,} Section 674, Section^{86 and Section1678 wouldreveal that the Parliamentary} intention as to the^{treatmentof an assessee's share of lossesof the AOP is not as} clear as it appeared^{to the commissionerof Income Tax in the present case'No} doubt, the Commissioner^{of IncomeTax relied upon the ruling in Lalita M' Bhat} (supra) of the Bombay^{High Courtbut as was noticed andrepeatedly urged, both} before the Commissioner^{of IncomeTax andthe Tribunal,that decisionwas before} the amendment to^{the Act which inserted Section67-4 with effect from} 01.04.1989. Furthermore,^{it is alsoa matter of record thatdifferentBenchesof the} Tribunal have^{taken differingviews on the interpretation of the same provisions} and the very^{same question} [refered^{to supra]'}

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In view of the^{above discussion,this Court is of the opinion that no fault} can be found with^{the impugnedorder of the Tribunal' Consequently,no} substantial^{question of law arises. The appeals are dismissed.}

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S. RAVINDRA^{BHAT, J}

[i,--*.

R.V.EASWAR,^J

SEPTEMBER^04,2012 mb

Cit v. Hindustan Times Ltd.

Case brief

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Cit v. Hindustan Times Ltd.

Case brief

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