2023 (7) TMI 807 - HC - Income Tax

Revenue's Appeal Admitted; Tribunal's Decision on Section 263 Set Aside, Substantial Legal Questions to be Addressed

The Pr. Commissioner of Income Tax-5 Versus Spicer India Ltd.

The Pr. Commissioner of Income Tax-5 Versus Spicer India Ltd. - [2023] 458 ITR 42 (Bom) Issues Involved:The judgment involves the issue of the appeal against the order passed by the Income-tax Appellate Tribunal, the revision under section 263 by the Commissioner of Income-tax, and the subsequent proceedings related to the assessment year 2006-07.Revision under Section 263:The respondent-assessee filed its return of income for the A.Y. 2006-07, which was selected for scrutiny leading to an assessment under section 143(3). The Commissioner of Income-tax found the order erroneous due to failure in applying relevant provisions, leading to a revision under section 263. The revised assessment directed the restriction of deduction under section 10B, resulting in an increased total income. The assessee approached the Tribunal contending that the revision order had been set aside, rendering the consequential order redundant.Tribunal's Decision and Appeal:The Tribunal accepted the assessee's argument, declaring the appeal infructuous based on the setting aside of the revision order. The revenue appealed this decision, raising substantial questions of law related to the application of provisions and the jurisdiction of the Commissioner under section 263. The High Court admitted the appeal for consideration, emphasizing the need to adjudicate on the merits of the issues arising from the Tribunal's decision.High Court's Analysis:The High Court reviewed the Tribunal's order and the subsequent appeal, noting that the Tribunal's adjudication encompassed multiple appeals, including the revision under section 263. The Court acknowledged the substantial questions of law raised by the revenue and emphasized the need to consider the merits of the adjudication under section 263. The Court clarified that the issue of jurisdiction was not the primary focus of the Tribunal's decision, as the assessee had primarily addressed the merits of the case.Conclusion:The High Court rejected the respondent-assessee's argument that the Tribunal's decision had settled the issue regarding the applicability of section 263. The Court admitted the revenue's appeal based on the substantial question of law related to the Tribunal's treatment of the assessment order. The Court directed the appeal to be heard alongside the pending Income Tax Appeal, ensuring comprehensive adjudication of both proceedings.