Question affecting tax liability of assessee can be raised before the Tribunal first time and it is obliged to consider them and pass appropriate orders – High Court
ABCAUS Case Law Citation:
ABCAUS 2101 (2017) (10) HC
In the instant case, the Income Tax Department (Revenue/Department ) had challenged the common order passed by the Income Tax Appellate Tribunal (ITAT) directing the Assessing Officer (AO) to consider the claim of the assessee(s) for the benefit of Section 10A of the Income Tax Act, 1961 (the Act).
In all the cases the claims of the assesseesu/s 10B had been originally allowed by the AO which was later denied due the Commissioner of Income Tax (CIT) invoking his jurisdiction u/s 263 and directing the AO to to withdraw the exemption under Section 10B.
Before the CIT, the assessees had raised an alternative contention that they were entitled to the benefit of Section 10A. However, in the order passed u/s 263, the CIT did not consider the claim of the assessees for the benefit of Section 10A.
Before the Hon’ble High Court, the primary contention of the Revenue was that the Commissioner having found that the benefit of section 10B granted to the assessee being erroneous and prejudicial to the interest of the revenue, it was not opened to the assessee to claim the benefit of Section 10A either before the Commissioner or the Tribunal.
The Hon’ble High Court opined that the appeal filed by the assessee was liable to be considered by the Tribunal exercising its power under Section 254 of the Act which obliged the Tribunal to consider the appeal and pass such orders thereon as it thinks fit.
The Hon’ble High Court observed that the Hon’ble Supreme Court in NTPC’s case had held that where the Tribunal is only required to consider the questions of law arising from the facts which are on record, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.
With respect to the contention raised by the Revenue that the power conferred on the CIT under Section 263 only authorised him to examine whether the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the revenue, the Hon’ble High Court observed that restriction of power of CIT cannot affect the powers of the Tribunal which is bound to exercise under Section 254 of the Act.