Director of Income Tax (Exemptions) vs Uma Maheshwar Parmarth Trust

The revenue is aggrieved by an order dated 13-2-2003, passed 1 by the Income Tax Appellate Tribunal, Delhi Bench "F", New Delhi in I. T. A. No. 4071/Del/1998 relevant for the assessment year 1995-96.

After hearing learned counsel for the parties, we admit the appeal and 2 frame the following substantial question of law for our consideration :

Whether the Income Tax Appellate Tribunal was right in law in rejecting the grounds raised by the revenue in appeal without recording reasons for such rejection ?" Since the question is a short one, we dispense with the filing of paper 3 books.

We find from a perusal of the impugned order that the Tribunal has 4 given absolutely no reason for rejecting ground No. 1 raised by the revenue except to say that no interference is called for in the peculiar facts and circumstances of the case. This is what the Tribunal has to say :

Having heard the rival submissions and perused the material placed on our files and taken into consideration the decision relied upon before us, we are of the view that in the peculiar facts and circumstances of the case, no interference is called for. It is seen that in the specific facts of the case, the decision of the jurisdictional High Court fortifies the case of the assessed. Accordingly, ground No. 1 raised by the revenue is rejected." Similarly, while rejecting ground No. 2, the Tribunal has again given no 5 reason and has rejected the contention in the facts and circumstances of the case. This is what the Tribunal has to say while rejecting ground No. 2 raised by the revenue :

Having heard the rival submissions and perused the material placed on our files and taken into consideration the various pages of the paper book to which our attention was invited, we are of the view that in the facts and circumstances of the case, no interference is called for. Being satisfied by the reasons recorded in the impugned order, ground No. 2 is rejected.

It is well-settled law that while disposing of an appeal, the appellate authority must record reasons for its decision. The appellate authority has examined the record of the case and has taken a view without giving any reason. This does not serve the cause of justice.

With regard to ground No. 1 urged by the revenue, reliance was placed by the assessed on Director of Income Tax (Exemption) Vs. Agrim Charan Foundation, . The decision has not been considered by the Tribunal. It has merely stated that on the facts and circumstances of the case, no interference is called for.

Similarly, while dealing with ground No. 2, the Tribunal has recorded the submissions of the revenue as well as the assessed and has stated that having gone through the various pages of the paper book, no interference is called for. It is true that: the Tribunal has expressed satisfaction with the reasons recorded by the Commissioner (Appeals) but the revenue was aggrieved by that order. The Tribunal ought to give some reason why the grievance of the revenue is not justified. If this is not done, the revenue will not know why its appeal has been dismissed.

Since the Tribunal has given no reason for dismissing the appeal of the revenue, we answer the substantial question of law in the negative, in favor of the revenue and against the assessed and remand the matter to the Tribunal for a fresh consideration in accordance with law. The Tribunal should give its reasons for whatever conclusion it arrives at on the merits of the case.

The appeal is disposed of.

That, while calculating the gross total income of the company, one has to adjust the losses from one priority unit against the profits of the other priority unit and if the resultant gross total income is ''nil'' then the assessed cannot claim deduction under Chapter VI-A.

We are in full agreement with the views expressed by the Bombay High 16 Court.

Learned counsel for the assessed would place reliance on a judgment of 17 this court in Commissioner of Income Tax Vs. Siddaganga Oil Extractions Pvt. Ltd., . In the said judgment, two other judgments of this court have been noticed Commissioner of Income Tax Vs. H.M.T. Ltd., and Sterling Foods Vs. Commissioner of Income Tax, Karnataka, . A careful reading of the said judgment would show that the said Division Bench of this court has not taken into consideration the impact of Section 80AB of the Act. In the light of the subsequent judgment of the Supreme Court these judgments are of no assistance to the assessed. In the given circumstances, we deem it proper not to place reliance on this judgment for the purpose of consideration of Section 80AB and that too in the light of the subsequent judgment of the Supreme Court which is binding on us.

Lastly, the contention with regard to Section 80AB of the Act, learned 18 counsel would say that the wording in Section 80AB would indicate that the deduction has to be with reference to the total income of the assessed and for the purpose of computing deduction in that section the amount of income of that nature as computed in accordance with the provisions of this Act has to be taken note of. According to learned counsel, the words "of that nature" have to be with reference to the activity of the tele cables and not with reference to lease business. We are not prepared to accept this submission. Section 80AB has been introduced with the laudable object of considering deduction with reference to the gross total income. Any acceptance of the argument of the assessed, would result in our diluting the words "gross total income".

Before concluding, we are slightly disturbed by the order of the Tribunal. 19 Section 80AB has been considered by the Apex Court with reference to deduction in the light of the other provisions of Chapter VI-A of the Act. The Apex Court in unmistakable terms has stated that Section 80AB overrides Chapter VI-A in two judgments. Even the assessed before the Commissioner has chosen to probably directly or indirectly accept that the income from lease business also to be included. A reference is also made to Section 80AB in the written statement as we see from the order of the Appellate Commissioner at page 56 of the paper book. The Commissioner to our surprise has not even chosen to refer to Section 80AB in granting relief in paragraph 5.2 of the order of the Commissioner. When this order was challenged before the Tribunal, it is rather un-understandable as to why the assessed as well as the department have not chosen to invite the attention of the Tribunal with regard to the applicability of Section 80AB despite argument before the Commissioner. We would be failing in our duty, if we do not remind the parties with regard to placing all case law supporting or opposing their stand for a decision before the judicial forum.

In the case on hand, unfortunately both the parties have not chosen to refer to the Tribunal the impact of Section 80AB. If only the department had invited the attention of the Tribunal to the impact of Section 80AB the Tribunal would not have passed this order. We express our displeasure in the matter. To avoid such recurring instances, in future, the Income Tax department is well-advised to engage competent legal counsel, before the Tribunal, whenever large sums of money are involved with complicated questions of law. Income Tax provides revenue to the Government. If the department is not properly defended, it would result in unnecessary references to this court and loss of time of every body concerned including the time of this court. We deem it proper to direct learned counsel to place our order before the Commissioner for proper premedical action in future cases.

In the result, this appeal is accepted. The order of the Tribunal in so far as this issue is concerned, is set aside. No costs.