TaxTMI 
TaxTMI 
2019 (10) TMI 1435
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....ion u/s. 10(20A) of the Act till A.Y. 2002-03. Section 10(20A) of the Income Tax Act was omitted by the Finance Act 2002 w.e.f. 01.04.2003. Therefore, under the Income Tax Act, 1961, no exemption is available to the assessee company. Following the omission of section 10(20A) of the I.T. Act, 1961, the income of the assessee is taxable as per the provisions of the Income Tax under various heads. According to Pr.CIT, the order passed by the AO u/s. 143(3) on 19.12.16 is erroneous in so far as it is prejudicial to the interest of revenue. Accordingly, he issued a show cause notice dated 07.12.2018 and served on the assessee. In response to the above notice, assessee submitted that the order passed by the AO u/s 143(3) is not erroneous as it was passed by the AO following the binding decision of the Jurisdictional High Court as well as the Jurisdictional Tribunal in assessee's own case. Therefore, the Commissioner does not have the jurisdiction for exercising powers u/s.263 of the Act. 4. After considering the submission of the assessee, Pr. CIT observed that there is no order of the Hon'ble jurisdictional High Court in income tax matter. Whereas, the assessee has relied ....
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....e Government are not taxable as per the provisions of Article 289(1) of the Constitution of India. 6. Further, Pr.CIT observed that assesse is not an agent of the Government and, therefore, the tasks performed by the assessee cannot be equated with the tasks performed by the State Government. By referring to Article 289(2) of the Constitution of India, enables levy of Union taxation on State Government owned companies and therefore, any income accruing to the assessee must be subjected to the provisions of Income Tax Act. According to him, assessee is a company and there is no dispute that assessee is a person as per the provisions of section 2(31) of the Income Tax Act, 1961. Further, he observed that assessee was incorporated as a Company on 19.03.1970 with a share capital which was wholly and exclusively subscribed by the Government of Maharashtra with the object of creation of New Town of Navi Mumbai, New Aurangabad, New Nasik etc. Therefore, assessee is incorporated as a Company and the entire share-capital subscribed by the Government of Maharashtra, but this fact itself does not prove that the tasks performed by this company are the tasks of the State Government. Pr. C....
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....263 of the Act is invalid and bad in law as the jurisdictional conditions for assuming jurisdiction under section 263 of the Act has not been fulfilled by the Principal Commissioner of Income-tax - 15. 3. On the facts and in the circumstances of the case and in law, the Principal Commissioner of Income-tax - 15 erred in holding that assessment order passed by the Assessing Officer was erroneous in so far as prejudicial to the interest of the Revenue and hence jurisdiction under section 263 of the Act has been properly exercised. 4. On the facts and in the circumstances of the case and in law, the Principal Commissioner of Income-tax15 erred in holding that the Appellant is not acting as an agent of the Government of Maharashtra. The Appellant craves leave to add, alter, amend or omit any of the aforesaid grounds of appeal. 10. Sr. Counsel of the assessee Shri Dastur, briefly submitted that this order of Pr. CIT passed u/s 263 against the order of AO, in which AO has accepted the assessee is an agent of the State Govt and the income of the State cannot be charged in the hands of the agent. Further, AO has called for the various information for the same issue on which order u/....
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.... assessee was appointed as agent only in order to develop new town. In the same process, assessee was appointed as Spl. Planning Authority in the area of Nagpur, Aurangabad, etc. The relevant resolutions are placed in the paper book. 11. Ld. Sr. Counsel specifically brought to our notice a letter received from Urban Development Department, Mantralaya, Mumbai, dated 1 st April 2008 in which, it is clearly noted that assessee is working as an agent of Govt. and it is not necessary on its part to pay the income tax returns. Further, he brought to our notice that assessee is held as an agent in the assessee's own case decided by the Hon'ble High Court in a single Member in the case of Percival Joseph Pareira vrs CIDCO, which is placed in page 11 of the paper book. In the above decision, Hon'ble Court has clearly decided that assessee is an agent of the State Govt. appointed u/s 113(3A) of MRPT Act, 1966 and the Divisional Bench of Hon'ble High Court also confirmed that assessee is an agent of the Govt, which is placed at page 198 of the paper book. In the above case, assessee itself filed a case against the single member decision of the Hon'ble High Court and the Hon'ble Divisional Be....
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....no. 141 to 152 which includes a note on the activities of the assessee company as required by the AO and assesssee has explained the various activities. He submitted that based on the above submission and AO has applied his mind to reach the onlypossible view that assessee is an agent of State Govt., accordingly, he completed the Assessment order u/s 143(3) of the Act. 14. Now, Ld. Pr.CIT has invoked the provision of section 263 of the Act by treating the above assessment as erroneous and Pr.CIT himself in para no. 4 mentioned that there is no order of the Hon'ble Jurisdictional High Court in Income Tax matter which has been passed in the case of assessee as on date. He further submitted that there is infact Hon'ble High Court decision in the assessee's own case which is placed on record, which should be binding on the Pr.CIT. Assessee can be treated as agent as per MRTP Act and not necessarily that asssessee should be treated as agent also in the case of Income Tax. Pr. CIT has grossly neglected the decision of the Hon'ble Bombay High Court in the case of Percival Joseph Pareira(supra) dated 07.11.09. However, Pr. CIT opined that the above decision pertains to compensation u....
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....servation is based without considering the real facts of the case and the order of the Tribunal cannot be held as per inquirim in that proposition. He brought to our notice the case of Tata Motors Ltd. vrs. Talathi of Village Chikhali & Ors (Civil appeal no. 10187 of 2010), wherein it was held as under:- 9. To know whether the Development Authority was an agent of the state government and to ascertain its status, it is necessary to refer to the relevant provisions of the Maharashtra Regional and Town Planning Act, 1966 (for short 'MRTP Act'). Section 113 of MRTP Act provides for designation of new towns and constitution of Development Authorities for those new towns. Subsections (1), (2), and (4) of that section are extracted below: "113. (1) If the State Government is satisfied that it is expedient in the public interest that any area should be developed as a site for a new town as reserved or designated in any draft or final Regional Plan it may by notification in the Official Gazette, designate that area as the site for the proposed new town. The new town shall be known by the name specified in the notification. (2) After publication of the notification under....
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....porate which can acquire, hold, manage and dispose of land. Section 113 provides for constitution of a New Town Development Authority. Section 114 states the objects of such Development Authority. Section 118 of MRTP Act provides for disposal by the Development Authority of any land acquired by it or vesting in it. The Development Authority is therefore a body corporate which can acquire, hold, possess, manage, develop and dispose of land in its name and on its own behalf. The fact that the Development Authority requires the consent of the state government to dispose of any of its land by way of leases in excess of 99 years will not alter the position that the lands leased are lands of the Development Authority. There is no provision in MRTP Act which requires the New Town Development Authority, to hold and dispose of any government land as agent of the state government. In contrast, MRTP Act contains a specific provision enabling the state government to require a corporation or company (other than a New Town Development Authority, which is specific to a new Town), to execute development work and dispose of its lands as its agent. Sub-section (3A) of section 113 of MRTP Act pr....
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.... of Supreme Court, even though ultimately it might be found that the particular question was not necessary for the decision of the case. The orbiter dicta of the Supreme Court should be followed by the High Courts, but where they are in conflict with the ratio of the same or another decision of the Supreme Court, the ratio should be followed in preference to the obiter dicta. Similarly, the ratio of a court's decision, as opposed to the general propositions stated there, should be followed. 19. Further he brought to our notice that the stay order passed by the Hon'ble Bombay High Court in assessee's own case and in the above decision, the stay was granted treating the assessee as an agent. He filed a copy of the decision and he submitted that the case of MIDC is that of different facts and relying on assessee's case which is different and to treat that as per enquirim is wrong and the case of MIDC is not relevant to assessee's case 20. Further, he brought to our notice at page no. 221 of the paper book, in which resolution passed by the State of Maharashtra dated 24th Jan 1972, as per which assessee was appointed to undertake all the developmentwork and to provide the socia....
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....tment before High Court and rejecting the order passed by the ITAT. He submitted that judicial discipline seeks that the AO in the jurisdiction of the ITAT must follow the order passed by the jurisdictional ITAT. In this regard, he relied upon the case of Union of India & Others vrs. Kamlakshi Finance Corporation Ltd. (1992 Supp (1) SC cases 648, wherein it was held as under:- 3. When the matter thus went back to the Assistant Collector he passed an order on 12.5.89, reiterating the conclusion that had been reached by his predecessor. He also did not give any reasons as to why the order of the Collector (Appeals) in respect of the Borivili plant was not followed. Not only this, the assessee had placed before him a decision of the Central Excise and Gold Control Appellate Tribunal ('the Tribunal') in the case of M/s. Chetna Plycoats (P) Ltd., reported in 1988(37) ELT 252 to a similar effect. The Assistant Collector distinguished it observing that the said decision had not been agreed to by the Department which had filed an appeal to the Supreme Court therefrom. The second order passed by the Assistant Collector was practically a repetition of the earlier order. 4. T....
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....i-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws. 23. On the other hand, Ld. DR brought to our notice at page no. 7 of the order of 263 in which assessee's income is chargeable to Income Tax under Article 289(2) and Pr. CIT clearly brought on record that assessee is not an agent of the Govt. of Maha....
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....department. The addition in the previous AY 2013-14, the assessment was completed u/s 143(3) by accepting the assessee as agent and income offered by the assessee as income from the business. 24. From the order passed by Pr. CIT u/s 263, we noticed that he intends to correct the assessments made by the AO u/s 143(3) by observing that the case of the assessee fall under Article 289(1) and presumed that assessee is claiming the exemption under Article 289(1), whereas all these years, assessee has filed the return of income and declared income earned from the Govt. of Maharashtra as an agent. As per the resolution passed by the Govt. of Maharashtra, the remuneration fixed at Rs. 5 lakhs per annum and the same was declared by the assessee over the years and the department has accepted the stand taken by the assessee from AY 2003-04 to 2013-14 other than AY 2006-07 and 2007- 08 in which department is in appeal before High Court. When the AO accepted the assessee is an agent and completed the assessment u/s 143(3) over the years, it means that the AO completed the assessment with one particular view, whereas Pr. CIT intends to correct the above view and presumed that the case of as....