2025 (3) TMI 231 - HC - Income Tax

Cross-objections not maintainable in Section 260A Income Tax appeals, respondents limited to connected issues only

Pr. Commissioner of Income Tax (Central) -2 Versus Nagar Dairy Pvt. Ltd.

Delhi HC held that cross-objections are not maintainable in appeals under Section 260A of the Income Tax Act. The court distinguished this from general ... Right to prefer cross-objections in an appeal referable to Section 260A - Appeals to the High Court on substantial questions of law - HELD THAT:- The various judgments that were cited and noticed above, have principally focused on the provisions of the Code and had interpreted the phrase “as far as may be” as being sufficient to hold that a cross-objection would lie even in an appeal from an appellate decree. However, here we are not only faced with the restrictive stipulation enshrined in Section 260A (6) of the Act but also by the prominent absence of a right to prefer cross-objections having been incorporated in Section 260A despite that avenue having been accorded statutory recognition in Section 253 (4) of the Act. In our considered opinion and bearing in mind the language of Section 260A (6)(b), the right of a respondent can at best stretch to advancing a contention in relation to any finding returned by the Tribunal adverse to that party and which has an indelible connect with the question of law on which the appeal may be admitted. We thus find ourselves unable to countenance sub-sections (6) and (7) of Section 260A as conferring an independent right in a respondent to maintain or continue an apparent challenge in respect of a finding rendered by the Tribunal de hors or disconnected with the substantial question of law on which such an appeal may be entertained. In summation, we would hold that absent a specific adoption of a right to prefer cross-objections and the same being statutorily acknowledged to be part of the appeal procedure laid out in Section 260A of the Act, a cross-objection would not be maintainable. Section 260A (6) is merely an enabling provision and which empowers a respondent to agitate an issue that may have been decided against it by the Tribunal subject to the condition that the same is indelibly connected with the decision which gives rise to the question of law on which we admit an appeal. The said provision cannot be construed as conferring an independent right upon a respondent to raise a challenge divorced or isolated from the question on which the appeal comes to be admitted. This would also be in line with the decisions rendered in the context of the Code and the maintainability of cross-objections in a second appeal and where it was held that in case the objection be indelibly coupled to the main question, there would be no legal requirement of preferring cross-objections separately. This since the same would merely entail the respondent seeking to press an issue though decided against it, in support of the ultimate decision rendered. Considering indisputable fact that the present applicants had preferred cross-objections before the Tribunal which came to be partly allowed. For instance, while Ground Nos. 1 and 2 thereof came to be rejected, Ground No. 3 came to be partly allowed alongside Ground No. 6 of the Revenue. The cross-objections thus came to be partly allowed. It was the stand of the respondent itself that a cross-objection is akin to an appeal. If that were so, the applicant could have possibly taken appropriate steps to assail the order of the Tribunal to the extent that it was so aggrieved. However, and for reasons assigned above, the remedy was clearly not that of a cross-objection. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment is whether cross-objections are maintainable in an appeal under Section 260A of the Income Tax Act, 1961. This involves examining the statutory framework of Section 260A, the applicability of the Civil Procedure Code (CPC) provisions, and the legislative intent behind the absence of a specific provision for cross-objections in Section 260A.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:Section 260A of the Income Tax Act provides for appeals to the High Court from orders passed by the Income Tax Appellate Tribunal (ITAT), contingent upon the involvement of a substantial question of law. The provision does not explicitly mention the right to file cross-objections, unlike Section 253(4), which allows for cross-objections at the ITAT stage. The legal question revolves around whether the procedural rules of the CPC, particularly Order XLI Rule 22, which allows cross-objections in appeals, apply to Section 260A appeals.Court's Interpretation and Reasoning:The Court analyzed the language of Section 260A and compared it with the CPC provisions. It emphasized that an appeal is a statutory right and must be expressly provided by the statute. The absence of a specific provision for cross-objections in Section 260A, despite its inclusion in Section 253(4), indicates a deliberate legislative choice to exclude cross-objections at the High Court appeal stage. The Court also noted that Section 260A(7) makes CPC provisions applicable only 'as far as may be,' suggesting limited applicability.Key Evidence and Findings:The Court found that Section 260A restricts appeals to substantial questions of law and does not incorporate a provision for cross-objections akin to Order XLI Rule 22 of the CPC. The legislative intent, as discerned from the statutory language and the absence of a cross-objection provision, is to narrow the scope of appeals under Section 260A.Application of Law to Facts:The Court applied its interpretation of Section 260A to the facts of the case, where the respondent had filed cross-objections in an appeal under Section 260A. The Court concluded that such cross-objections are not maintainable, as the statutory framework does not support their inclusion at this stage of the appeal process.Treatment of Competing Arguments:The respondent argued for the applicability of CPC provisions and the necessity of cross-objections to challenge adverse findings by the Tribunal. However, the Court rejected this argument, emphasizing the statutory silence on cross-objections in Section 260A and the distinct legislative framework compared to the CPC.Conclusions:The Court concluded that cross-objections are not maintainable in appeals under Section 260A of the Income Tax Act. The statutory framework and legislative intent do not support the inclusion of cross-objections at this stage, and the procedural rules of the CPC do not override the specific provisions of the Income Tax Act.3. SIGNIFICANT HOLDINGSThe Court held that:'Absent a specific adoption of a right to prefer cross-objections and the same being statutorily acknowledged to be part of the appeal procedure laid out in Section 260A of the Act, a cross-objection would not be maintainable.'The Court established the principle that the statutory framework of Section 260A, coupled with the absence of a provision for cross-objections, precludes their maintainability in appeals under this section. The final determination was that the cross-objections filed in the present case were not maintainable, and the appeals would proceed without considering these cross-objections.