2020 (10) TMI 1398 - HC - Income Tax

Appeal Admitted Over Tax Benefits for Government Corporation Under Section 10(26BBB); Stay Application Dismissed as Misconceived.

UTTARAKHAND PURV SAINIK KALYAN NIGAM LTD. Versus THE COMMISSIONER OF INCOME TAX SUBHASH ROAD DEHRADUN

The Uttarakhand HC admitted the appeal challenging the ITAT's decision, which upheld the CIT's judgment concerning the erroneous and prejudicial nature of ... Denial of exemption claimed u/s 10(26BBB) - Tribunal [2019 (1) TMI 1267 - ITAT DELHI] for assessee’s claim for exemption u/s 10(26BBB) is rejected by the AO is confirmed - HELD THAT:- Appeal admitted on following substantial questions of law- 1. Whether the Ld. ITAT, committed a manifest error of fact and law in upholding the judgment and order dated 04.03.2015, passed by the Ld. CIT, Dehradun in so far as not appreciating that the twin tests of the order being of an erroneous nature and of its being prejudicial to the interests of Revenue were not satisfied? 2. Whether the Ld. ITAT, committed a manifest error of fact and law, in not appreciating that it was settled law that a Government Corporation, incorporated under the Companies Act, 1956 that if the words “by and under an Act” are proceeded by the word “established” u/s 10(26BBB) then the special categories of companies, including a Government company, would fall in the category of the word “establishment” and whether the said Government company would be eligible to the benefit of section 10(26BBB) or not? So far as stay application is concerned, the plea of the assessee before the tribunal has been dismissed. Hence, there cannot be a stay of the said order. The Uttarakhand High Court, presided over by Hon'ble Ravi Malimath, A.C.J., and Hon'ble Ravindra Maithani, J., addressed an appeal involving substantial questions of law concerning the Income Tax Appellate Tribunal's (ITAT) decision. The court considered whether the ITAT erred in upholding the judgment of the Commissioner of Income Tax (CIT), Dehradun, particularly regarding the failure to satisfy the 'twin tests' of an order being erroneous and prejudicial to the interests of Revenue. Additionally, the court examined whether the ITAT failed to recognize that a Government Corporation, incorporated under the Companies Act, 1956, qualifies for benefits under section 10(26BBB) when the term 'established' is used in conjunction with 'by and under an Act.' The court admitted the appeal but dismissed the stay application (CLMA No.8059/19) as misconceived, noting that the plea for a stay by the assessee before the tribunal had been dismissed.