COMMISSIONER OF INCOME TAX vs. SAM GLOBAL SECURITIES LTD

Full Judgment Text

$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI

nd
+ Date of Decision: 2 September, 2013.

% Income Tax Appeal 214/2013

COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr.Sanjeev Rajpal, Sr. Standing
Counsel.

versus

SAM GLOBAL SECURITIES LTD .... Respondent
Through: Mr. Salil Kapoor and Mr. Vikas Jain,
Advocates.

CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJIV KHANNA, J. (ORAL)

Revenue in this appeal, which pertains to assessment year 2001-
02, rely upon judgment of the Supreme Court in Goetze (India) Ltd.
Vs. CIT , (2006) 284 ITR 323 (SC). The contention is that the
respondent-assessee should be denied deduction under Section 10
(35)(a) of the Income Tax Act, 1961(Act) and claim of business loss of
Rs.85,18,854/- should be rejected as no revised return was filed under
Section 139(5) of the Act.
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2. It is an accepted position that the assessee had not claimed the
st
said deduction or business loss in the return of income filed on 31
October, 2001, declaring taxable income of Rs. 1,72,910/-.
Subsequently, notice for scrutiny assessment under Section 143(2)(ii)
was issued. During the course of the assessment proceedings, the
respondent-assessee had filed revised computation of income vide
th
letter dated 12 January, 2004, claiming that dividend of
Rs. 80,48,977/- from the units of mutual fund was exempt under
Section 10(33) of the Act and loss on sale of units amounting to
Rs.85,18,583/- was a business loss and not speculative loss.
3. The claims were rejected by the Assessing Officer on three
grounds that the respondent-assessee had not filed a revised return
within the time allowed under Section 139(5) of the Act; dividend was
received from Sun F&C Mutual Fund, which was not included in the
specified list of mutual funds approved by SEBI; and as the assessee
was dealing with shares, income/loss from shares/units was speculative
loss and not business loss.
4. CIT (Appeals) dismissed the appeal of the assessee, but on
remand the matter was restored to the first appellate authority.
th
Thereupon, vide order dated 16 February, 2009, CIT (Appeals) held
that Sun F&C Mutual Fund was duly approved mutual fund under
Section 10(23D). He observed that dividend from the units of
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mutual fund was exempt under Section 10 (35)(a). Similarly with
regard to the loss, he observed that units of mutual funds were sold and
not shares, and therefore, the adverse effect of Explanation to Section
73 was not applicable. Reliance was placed upon decision of the
Supreme Court in Apollo Tyres Ltd. Vs. CIT , (2002) 255 ITR 283
(SC). Inspite of the said observations, the CIT (Appeals) did not allow
the appeal on the ground that the assessee had not filed a revised return
within the time allowed under Section 139(5) of the Act, but had only
filed a revised computation.
5. The tribunal has reversed the said findings after referring to the
factual matrix. Reference was made to the decision of the Supreme
Court in CIT Vs. Mr. P. Firm , (1965) 56 ITR 67 (SC) and Circular No.
th
114 XL-35 of 1955 issued by the Central Board of Direct Taxes on 11
April, 1955, that an officer must not take advantage of ignorance of the
assessee as to his rights. Judgment of the Supreme Court in Goetze
India Ltd. ( supra ) was distinguished on the ground that the said case
was limited to the power of the assessing authority and did not impinge
upon the power of the tribunal. The matter was remanded to the
Assessing Officer to consider the case on merits and decide
accordingly.
6. In Commissioner of Income Tax Vs. Jai Parabolic Springs
Ltd. , [2008] 306 ITR 42 (Delhi), a Division Bench of this Court made
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reference to the following passage from National Thermal Power Co.
Ltd. Vs. CIT , [1998] 229 ITR 383(SC):-

“
thus expressed in the widest possible terms. The
purpose of the assessment proceedings before the
taxing authorities is to assess correctly the tax liability
of an assessee in accordance with law. We do not see
any reason to restrict the power of the Tribunal under
Section	254	only to decide the grounds which arise
from the order of the Commissioner of Income Tax
(Appeals). Both the assesses as well as the
Department have a right to file an appeal/cross-
objections before the Tribunal. We fail to see why the
Tribunal should be prevented from considering
questions of law arising in assessment proceedings
although not raised earlier.”

7. Reference was also made to an earlier decision of the Supreme
Court in Jute Corporation of India Ltd. Vs. CIT , [1991] 187 ITR 688
(SC), wherein it has been held as under:-

“	An appellate authority has all the powers which the
original authority may have in deciding the question
before it subject to the restrictions or limitations, if
any, prescribed by the statutory provisions. In the
absence of any statutory provision, the appellate
authority is vested with all the plenary powers which
the subordinate authority may have in the matter.
There is no good reason to justify curtailment of the
power of the Appellate Assistant Commissioner in
entertaining an additional ground raised by the
assessed in seeking modification of the order of
assessment passed by the Income Tax Officer. This
Court further observed that there may be several
factors justifying the raising of a new plea in an
appeal and each case has to be considered on its own
facts. The Appellate Assistant Commissioner must be
satisfied that the ground raised was bona fide and that

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the same could not have been raised earlier for good
reasons. The Appellate Assistant Commissioner
should exercise his discretion in permitting or not
permitting the assessed to raise an additional ground
in accordance with law and reason. The same
observations would apply to appeals before the
Tribunal also.”

8. Decision in the case of Goetze (India) Ltd. ( supra ) was
distinguished in Jai Parabolic Springs Ltd. ( supra ) in the following
words:-
“In Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323
(SC) wherein deduction claimed by way of a letter before
the Assessing Officer, was disallowed on the ground that
there was no provision under the Act to make amendment
in the return without filing a revised return. Appeal to the
Supreme Court, as the decision was upheld by the
Tribunal and the High Court, was dismissed making clear
that the decision was limited to the power of the assessing
authority to entertain claim for deduction otherwise than
by a revised return, and did not impinge on the power of
the Tribunal.”

9. In CIT Vs. Natraj Stationery Products (P) Ltd. , (2009) 312 ITR
222 reliance placed on Goetze (India) Ltd. ( supra ) by the Revenue was
rejected, as the assessee had not made any „new claim‟ but had asked
for re-computation of deduction under Section 80-IB. The said
decision may not be squarely applicable but the Courts have taken a
pragmatic view and not the technical view as what is required to be
determined is the taxable income of the assessee in accordance with the
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law. In this sense, assessment proceedings are not adversarial in
nature.
10. In Commissioner of Income Tax Vs. Rose Services Apartment
India P. Ltd. , [2010] 326 ITR 100 (Delhi) relying upon the decision of
the Supreme Court in National Thermal Power Co. Ltd. (supra ) , a
Division Bench of this Court rejected the plea of the Revenue that the
tribunal could not have entertained the plea, holding that the tribunal
was empowered to deal with the issue and was entitled to determine
the claim of loss, if at all, under one section/provision or the other.
11. Decision in Goetze (India) Ltd. ( supra ) was again relied upon by
the Revenue in CIT Vs. Jindal Saw Pipes Ltd. , [2010] 328 ITR 338
(Delhi) but the contention was not accepted, observing that the
tribunal‟s jurisdiction is comprehensive and assimilates issues in the
appeal from the order of the CIT (Appeals) and the tribunal has the
discretion to allow a new ground to be raised.
12. In view of the aforesaid discussion, we are not inclined to
interfere with order passed by the tribunal. The appeal is dismissed.

SANJIV KHANNA, J.

SANJEEV SACHDEVA , J.
SEPTEMBER 02, 2013
NA
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