Commissioner of Income Tax vs Income Tax Appellate Tribunal and Another

The point raised in this writ petition is fully covered by a decision of this court in Commissioner of Income Tax Vs. Arvind Construction Co. Pvt. Ltd, . The controversy pertains to the assessment year 1982-83. Briefly the facts are that respondent No. 2 Delhi Automobiles Limited claims that Rs. 1 crore received on account of transfer of its rights in a hotel project is a capital receipt and not taxable. The case of the Revenue was that it is a revenue receipt and even if it was a capital receipt it was liable to be taxed as Short term capital gain. When the matter went in appeal before the Income Tax Appellate Tribunal the majority of the members of the Tribunal ordered that the amount was not taxable.

The appeal before the Tribunal was disposed of on December 31, 1991. The order was received in the office of the Commissioner of Income Tax, Delhi VII, who had the jurisdiction over the assessee, on October 12, 1994. It is only the Commissioner of Income Tax, Delhi VII who could file a reference application u/s 256(1) of the Income Tax Act. The application was accordingly filed by the Commissioner of Income Tax, Delhi VII, within the prescribed time of sixty days. However the Tribunal took the view that the period of limitation commenced from January 24, 1992, when a copy of the order was served on the Commissioner of Income Tax, Central-I and for that reason the application u/s 256(1) was barred by limitation. Thus the controversy in the present petition is whether the period of limitation would commence from service of the order on the concerned Commissioner of Income Tax who has jurisdiction over the assessed or it will commence from service of the order on Commissioner of Income Tax, Central-I, who did not have jurisdiction over the assessee. This precise question was decided by this court in Commissioner of Income Tax Vs. Arvind Construction Co. Pvt. Ltd, . In that case the order u/s 256(1) had been served on the Chief Commissioner. Thereafter the Commissioner of Income Tax had filed an application u/s 256(2) and it was contended by the assessed that the date of service on the Chief Commissioner would be the starting of the period of limitation. On the correct interpretation of Section 256(2) which is in pari materia with the provisions of Section 256(1), this court came to the conclusion vide the said judgment dated January 24, 1991, that what was material was the service on the Commissioner of Income Tax concerned and not the service on Chief Commissioner. It is the Commissioner of Income Tax concerned who alone has the jurisdiction to file application and it is imperative that it is he who should be served with a copy of order either u/s 254 or 256(1). We are in respectful agreement with the said decision of this court,

Accordingly, the impugned order dated April 2, 1996, of the Tribunal dismissing the application u/s 256(1) on the ground of limitation is hereby set aside. The matter is remanded back to the Tribunal for decision of the application (RA No. 1153 Delhi of 1994) u/s 256(1) on the merits.

The writ petition is disposed of with no order as to costs.