U.P. Forest Corporation vs Deputy Commissioner of Income Tax

This is an appeal by the U. P. Forest Corporation u/s 260A of the Income Tax Act, 1961, and is directed against the judgment and order passed by the Income Tax Appellate Tribunal, Bench-B, Allahabad, in ITA No. 209 (All) of 1993, for the assessment year 1990-91.

We have heard Sri S, P. Gupta, learned senior advocate for the appellant, assisted by Sri S. D. Singh, learned counsel for the appellant.

The U. P. Forest Corporation is an undertaking" of the Government of U. P. In the Income Tax assessment proceedings, it set up a case that it is a local authority within the meaning of Section 10(20) of the income tax-Act, 1961, and, therefore, its income is exempt. This plea was not accepted by the Assessing Officer and an assessment was made by order dated August 27, 1992. The appellant appealed to the Commissioner of Income Tax (Appeals) who vide order dated November 23, 1992, decided the issue in favour of the appellant and in doing so, he followed a judgment of this court dated May 19, 1988, passed in W. P. No. 4424 of 1987. The Revenue appealed to the Tribunal in ITA No. 209 of 1993. During the pendency of the said appeal, the matter was decided by the Supreme Court by a judgment dated March 2, 1998, reported in The Commissioner of Income Tax, Lucknow Vs. U.P. Forest Corporation, . The Tribunal, therefore, allowed the Revenue''s appeal. The relevant part of its order is as under :

"4. We have carefully considered the rival submissions and the material on record. So far as the Revenue''s appeal is considered, the matter has to be decided in favour of the Revenue in view of the Supreme Court judgment which we respectfully follow that income of the respondent-assessee (U.P. Forest Corporation) is not exempt u/s 10(20) of the Income Tax Act, 1961.

So far as the contention of the authorised representative of the respondent-assessee in respect of the applicability of the provisions of Section 11(1)(a) of the Income Tax Act, 1961, is concerned, the issue does not arise from the Revenue''s appeal, therefore, we refrain from observing anything about the same.

In the result, the Revenue''s appeal is treated as allowed."

The assessee had raised a large number of grounds in the appeal before the Commissioner (Appeals) but the Commissioner having held that the appellant to be a local authority, he did not decide the other pleas that had been set up by the assessee-appellant. Before the Tribunal, there was no option for it but to allow the appeal of the Revenue in view of the judgment of the Supreme Court and it has disposed of the matter observing as above. The assessee had pointed out to the Tribunal that there were other issues involved in the appeal and it is reflected from paragraph 5 of the Tribunal''s order.

The grievance of the U. P. Forest Corporation, the appellant, before us is that the Tribunal having not specifically said that the other pleas have to be decided by the Commissioner of Income Tax (Appeals), the latter would not do so. We find no reason for such an apprehension. It would have been better if the Tribunal had not acted miserly in using proper words in its order and had specifically stated that the Commissioner''s order under appeal is set aside and the Commissioner will now dispose of the appeal according to law. The mere expression that the appeal is allowed is slightly vague and should have been followed by what the order exactly is. When an appeal is allowed, the order of the lower authority is either reversed or quashed or modified or the matter is remitted back to the lower authority for a fresh decision. This is what is mentioned in Section 251 of the Act when it says that the Commissioner (Appeals) may confirm, reduce, enhance or annul the assessment or he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment. To the extent the power of the Tribunal extends, it should have specified what its order means and what legal effect it has. But even if it has not been done, that does not mean that the Commissioner''s order that was under appeal before the Tribunal, stands and remains in effect. The result of the Tribunal''s order is that the Commissioner''s order stands set aside and as a necessary legal consequence, the Commissioner has to decide the appeal in so far as the other pleas raised by the appellant are concerned. In our view, therefore, a mere deficiency of a few words in the Tribunal''s order, does not raise a substantial question of law for which this appeal may be entertained.

With the aforesaid observations, the appeal is dismissed as not maintainable.