THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 02.07.2013
+ ITA Nos. 148/2012, ITA 149/2012 & ITA 2/2013
COMMISSIONER OF INCOME TAX-X ... Appellant
versus
M/S AAR BEE INDUSTRIES ... Respondent
Advocates who appeared in this case:
For the Appellant : Mr N. P. Sahni
For the Respondent : Mr C.S. Aggarwal, Sr Advocate with Mr Prakash
Kumar, Ms Pushpa Sharma
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED, THE ACTING
CHIEF JUSTICE
HON'BLE MR JUSTICE R.V. EASWAR
JUDGMENT
BADAR DURREZ AHMED, ACJ
1. These appeals (ITA No.149/2012, 148/2012 and 2/2013) relate to the
assessment years 2005-06, 2006-07 and 2008-09, respectively. The first
two appeals arise out of the common order dated 24.06.2011 passed by the
Income-tax Appellate Tribunal, Amritsar Bench, in ITA Nos.179-
180/Asr/2011, respectively. The third appeal (ITA 2/2013) arises out of the
order dated 27.07.2012 passed by the said Tribunal in ITA
No.343/Asr/2011. All the three appeals have been preferred by the
revenue. In the first two appeals pertaining to the assessment years 2005-
06 and 2006-07, condonation of delay applications have been filed.
ITA No.148/12, 149/12 & 2/13 Page 1 of 13
2. When these matters came up for hearing before this Bench, the issue
of jurisdiction was raised by the learned counsel for the respondent /
assessee. It was contended on behalf of the respondent that this court did
not have jurisdiction to entertain these appeals inasmuch as the assessment
order was passed by the Assessing Officer in Jammu, the appellate order
was passed by the Commissioner of Income-tax (Appeals) at Jammu and
the Tribunal's order is also of the Amritsar Bench of Income-tax Appellate
Tribunal which had jurisdiction in respect of the appeals from, inter alia,
the State of Jammu and Kashmir. It was, therefore, contended that the High
Court having jurisdiction over the Assessing Officer at Jammu, who passed
the assessment order would have jurisdiction and not this court.
3. On the other hand, the learned counsel for the appellant / revenue
submitted that it is this court alone which would have jurisdiction to hear
these appeals inasmuch as the `case' of the respondent has been transferred
from the Income-tax Officer, Ward-I(1), Jammu to the Income-tax Officer,
Ward-29(1), New Delhi. It was contended that since the `case' stands
transferred to the Assessing Officer in New Delhi, it is this court which
would have jurisdiction to entertain these appeals under Section 260-A of
the Income-tax Act, 1961 (hereinafter referred to as `the said Act').
4. We shall refer to the facts in ITA 149/2012, which pertains to the
assessment year 2005-06. The learned counsel for the respondent / assessee
filed its return of income on 31.10.2005 in Jammu. The Assessing Officer
was the Income-tax Officer, Ward-I(1), Jammu. In that return, the
respondent / assessee, inter alia, claimed deduction under Section 80-IB(4)
ITA No.148/12, 149/12 & 2/13 Page 2 of 13
of the said Act. The said Assessing Officer at Jammu issued notices under
Section 143(2)/142(1) on 04.07.2006 and took up the matter for regular
assessment. The assessment proceedings culminated in the assessment
order dated 23.03.2007 which was passed by the said Assessing Officer at
Jammu. The said Assessing Officer had disallowed the deduction claimed
by the respondent / assessee under Section 80-IB(4) of the said Act.
5. Being aggrieved by the disallowance, the respondent filed an appeal
before the Commissioner of Income-tax (Appeals), Jammu. That appeal,
was decided in favour of the respondent / assessee by the said
Commissioner of Income-tax (Appeals), Jammu on 23.02.2011 by
following the decision of the Jammu & Kashmir High Court in the case of
Shree Balaji Alloys v. CIT: 333 ITR 335 (J&K). In effect, the
Commissioner of Income-tax (Appeals) allowed the respondent's claim for
deduction under Section 80-IB(4) of the said Act.
6. Thereafter, the revenue filed an appeal before the Income-tax
Appellate Tribunal, Amritsar Bench, Amritsar being ITA No.179/Asr/2011.
It may be pointed out that as per the relevant Standing Order under the
Income-tax (Appellate Tribunal) Rules, 1963 and, in particular, rule 4(1)
thereof, the jurisdiction of the Amritsar Bench of the Income-tax Appellate
Tribunal extended to, inter alia, the State of Jammu and Kashmir. The said
Tribunal heard the appeal alongwith ITA No.180/Asr/2011 pertaining to the
assessment year 2006-07 and dismissed both the appeals of the revenue by
a common order dated 24.06.2011. The said Amritsar Bench of the
ITA No.148/12, 149/12 & 2/13 Page 3 of 13
Tribunal followed the jurisdictional High Court decision in the case of
Shree Balaji Alloys (supra) of the Jammu and Kashmir High Court.
7. Aggrieved by the order dated 24.06.2011, appeals (ITA Nos.
149/2012 and 148/2012) have been preferred before this court. Under
similar circumstances, the Amritsar Bench of the Tribunal dismissed the
revenue's appeal in respect of the assessment year 2008-09 by an order
dated 27.07.2012 in ITA No.343/Asr/2011. Against that decision, ITA No.
2/2013 has been preferred.
8. On 23.03.2011, while the appeals were pending before the Tribunal,
the respondent / assessee sent a letter to the Commissioner of Income-tax,
Jammu & Kashmir (Jammu) seeking transfer of its case to Delhi. Pursuant
thereto, by an order dated 20.09.2011 issued under Section 127 of the said
Act, the case of the respondent / assessee was transferred with effect from
26.09.2011 from the Income-tax Officer, Ward-I(1), Jammu to the Income-
tax Officer, Ward-29(1), New Delhi. In the meanwhile, the impugned
order dated 24.06.2011 passed by the Amritsar Bench of the Tribunal had
been received in the office of the Commissioner of Income-tax, Jammu on
05.07.2011. That order was forwarded to the Commissioner of Income-tax
(X), Delhi and it was received in his office on 10.10.2011. It is, thereafter
that the appeals being ITA No. 148/2012 and ITA No.149/2012 were filed
some time in February, 2012. Under similar circumstances, the third appeal
being ITA No.2/2013 was also filed in November, 2012.
9. The learned counsel for the respondent / assessee had placed reliance
on the following decisions:-
ITA No.148/12, 149/12 & 2/13 Page 4 of 13
1. Ambica Industries v. CCE: 2007 (6) SCC 769;
2. Commissioner of Income-tax v. Digvijay Chemicals Limited:
294 ITR 359 (Del);
3. Suresh Desai and Associates v. Commissioner of Income-
tax: 230 ITR 912 (Del);
4. Seth Banarsi Dass Gupta v. Commissioner of Income-tax:
113 ITR 817 (Del);
5. Commissioner of Income-tax v. Motorola India Limited: 326
ITR 156 (P&H).
On the other hand, the learned counsel for the revenue had placed reliance
on a judgment of a Division Bench of this court in the case of CIT v.
Sahara India Financial Corporation Limited: 294 ITR 363 (Del).
10. The decisions of Seth Banarsi Dass (supra), Suresh Desai (supra)
and Digvijay Chemicals (supra) are in the same line. In fact, Digvijay
Chemicals (supra) being the latest of these three decisions has referred to
and relied upon both the decisions in Seth Banarasi Dass (supra) and
Suresh Desai (supra). In Digvijay Chemicals (supra), this court observed
as under:-
"We have given our anxious consideration to the submissions
made before us at the Bar. The material facts are not in dispute.
The assessee was being assessed at Bulandshahar for the earlier
years including the assessment years 1993-94 and 1994-95. The
assessment orders passed for the above two assessment years
were assailed before the Commissioner of Income-tax
(Appeals), Meerut, who had dismissed the same on April 23,
1998. Appeals against the said order were filed before the
Income-tax Appellate Tribunal at Delhi as the Tribunal located
at Delhi was exercising jurisdiction even over territories falling
ITA No.148/12, 149/12 & 2/13 Page 5 of 13
in the adjoining State of Uttar Pradesh. The Tribunal eventually
decided the appeal on October 28, 2004. In the meantime the
assessment records for the assessment years 1988-89, 2000-01
and 2001-02 were transferred to Delhi in terms of an order
passed under section 127 of the Income-tax Act. The question
is, whether the said order of transfer would alter the course of
events in so far as the filing of an appeal before the High Court
competent to hear the same is concerned. In our view it does
not. We say so because the forum of appeal is determined by
reference to the situs of the Assessing Officer and not the
Tribunal. The Division Bench decisions of this court in Seth
Banarsi Dass Gupta's case [1978] 113 ITR 817 and in Suresh
Desai's case [1998] 230 ITR 912 relied upon by Mr. Aggarwal
sufficiently settle the legal position in that regard. This court
has in Seth Banarsi Dass Gupta's case [1978] 113 ITR 817 held
that when an Appellate Tribunal hears and determines an appeal
from any particular State, it would be appropriate for the Bench
to state the case to the High Court of the State from which the
appeal arose. That principle stated in relation to the position
that existed before the introduction of section 260A of the Act
would, in our opinion, hold good even after the remedy by way
of a reference is substituted by a regular appeal. The test for
determining the jurisdiction of the High Court would be
whether the assessment proceedings were completed within its
territorial limits. Viewed thus, not only were the assessment
proceedings in the instant case completed in Bulandshahar, but
even the appeals arising out of the said proceedings were heard
and disposed of by the Commissioner of Income-tax (Appeals),
Meerut. We have in that view no difficulty in holding that an
appeal against the order passed by the Tribunal even though
located in Delhi ought to be filed in the High Court at
Allahabad."
ITA No.148/12, 149/12 & 2/13 Page 6 of 13
11. These three decisions would, therefore, apparently tend to support
the case of the respondent / assessee. However, these very decisions have
been considered by a Division Bench of this court in a subsequent decision
in the case of Sahra India (supra). The said decisions in Banarasi Dass
Gupta (supra), Suresh Desai (supra) and Digvijay Chemicals (supra) have
been distinguished in Sahara India (supra). The Division Bench in Sahara
India (supra) observed as under:-
"Learned counsel for the assessee contended that since the
assessment orders had already been passed in respect of the
assessee and a decision had also been taken by the Tribunal,
there was no question of transferring the jurisdiction in respect
of the assessee from one place to another. We are of the view
that this argument is completely misplaced. The Explanation to
section 127(4) of the Act tells us what the word "case" means
in relation to any person whose name is specified in any order
or direction issued under section 127 of the Act. The
Explanation says that "case" means all proceedings under the
Act in respect of any year :(i) which may be pending on the
date of the order or direction ;(ii) which may have been
completed on or before the date of the order or direction ;(iii)
including all proceedings which may be commenced after the
date of the order or direction in respect of any year. In other
words, the Explanation to section 127(4) of the Act talks of
proceedings, past, present and future in respect of a person
whose name is specified in the order or direction passed under
section 127 of the Act and this would apply to any previous
year. The order passed under section 127(2) of the Act clearly
relates to the "case" of the assessee mentioned in the Schedule,
and by virtue of the Explanation, all future proceedings that
may be taken under the Act (obviously including an appeal
under section 260A thereof) would now have to be in harmony
with the order passed under section 127(2) of the Act.
Consequently, the jurisdiction in respect of the "case" and the
ITA No.148/12, 149/12 & 2/13 Page 7 of 13
asses-see having been shifted from Lucknow to Delhi, the
Revenue could file the appeal under section 260A of the Act
only in Delhi and it could not have filed an appeal in the
Lucknow Bench of the Allahabad High Court. Learned counsel
for the assessee relied upon two decisions of this court to
contend that the situs of the Assessing Officer is what
determines the jurisdiction of the High Court in respect of
entertaining an appeal under section 260A of the Act. In
support of his argument, learned counsel relied upon Suresh
Desai and Associates v. CIT [1998] 230 ITR 912 (Delhi) and
CIT v. Digvijay Chemicals Ltd. [2007] 294 ITR 359
(Delhi).We have gone through both these decisions with the
assistance of learned counsel for the parties and while the
accepted general principle is that the situs of the Assessing
Officer is what determines the High Court having jurisdiction
over the case, none of these decisions deals with one important
aspect of the case (because it did not arise), namely, what
would happen when the situs of the Assessing Officer is
changed by an order passed under section 127 of the Act, as has
happened in the present case. One important fact in both the
above decisions was that even though there was a transfer of
jurisdiction from one place to another, the proceedings in
respect of the relevant previous year had not been transferred
from one jurisdiction to another. In Suresh Desai [1998] 230
ITR 912 (Delhi), the relevant assessment year was 1980-81 and
as mentioned in the decision, the assessment records of the
petitioner were ordered to be transferred from Bombay to Delhi
but the transfer did not pertain to the assessment year 1980-81.
Similarly, in Digvijay Chemicals Ltd. [2007] 294 ITR 359
(Delhi) the relevant assessment year was 1993-94 but the
assessment records that were transferred to Delhi were those
pertaining to the assessment years 1988-89, 2000-01 and 2001-
02. It is for this reason that the effect of the transfer of
jurisdiction under section 127 of the Act was not discussed
either in Suresh Desai [1998] 230 ITR 912 (Delhi) or in
Digvijay Chemicals [2007] 294 ITR 359 (Delhi) because that
question, on the facts of the case, did not arise for
consideration. Learned counsel for the assessee, therefore,
ITA No.148/12, 149/12 & 2/13 Page 8 of 13
cannot draw any assistance from any of the two decisions cited
by him. On the other hand, the effect of the transfer of
jurisdiction from Luc-know to Delhi specifically arises in the
present case and we are of the view that the jurisdiction in
respect of the assessee having been transferred to Delhi lock,
stock and barrel and all the records of the assessee also having
been transferred from Lucknow to Delhi, it is only the High
Court in Delhi that can entertain an appeal under section 260A
of the Act directed against the order passed by the Tribunal on
July 22, 2005. Our conclusion follows from a plain reading of
the Explanation to section 127(4) of the Act as well as from the
effect of the order dated July 29, 2005, passed by the Com-
missioner of Income-tax (Central), Kanpur, under section
127(2) of the Act. Consequently, with effect from September
29, 2005, (the date from which the order passed under section
127(2) of the Act is enforced) the jurisdiction in respect of the
assessee for future proceedings under section 260A of the Act
is with the Delhi High Court. Admittedly, the present appeals
have been filed after September 29, 2005, and so they would be
maintainable in this court and no other High Court. Under the
circumstances, we reject the contention of learned counsel for
the assessee."
12. The important fact pointed out in Sahara India (supra) was that the
decisions in Suresh Desai (supra) and Digvijay Chemicals (supra), even
though they involved a transfer of jurisdiction from one place to another,
the proceedings in respect of the relevant previous years had not been
transferred from one jurisdiction to another. For example, in Suresh Desai
(supra), the relevant assessment year was 1980-81. But, the transfer did
not pertain to the assessment year 1980-81. In Digvijay Chemicals (supra),
the relevant assessment year was 1993-94, but the assessment records,
which were transferred to Delhi pertained to the assessment years 1988-89,
2000-01 and 2001-02. In other words, the assessment records for the
ITA No.148/12, 149/12 & 2/13 Page 9 of 13
relevant assessment years had not been transferred in those cases and,
obviously, the question of considering the provisions of the Explanation to
Section 127(4) of the said Act, which explained the meaning of the word
`case', had not been considered in those decisions.
13. The point in issue in the present case is entirely covered by the
decision in the case of Sahara India (supra). The learned counsel for the
respondent had placed reliance on the decision of the Punjab & Haryana
High Court in the case of Motorola India (supra) to contend that the
Explanation to Section 127 of the said Act with regard to the meaning of
the expression `case', was wholly misplaced because Section 120 of the
said Act did not deal with the jurisdiction of the Tribunal or the High Court
and it only had a reference to the income-tax authorities under the said Act
which obviously did not include the ITAT or the High Court. The Punjab
& Haryana High Court in the case of Motorola India (supra) observed as
under:-
"The decision of the High Court is binding on the subordinate
courts and authorities or Tribunals under its superintendence
throughout the territory in relation to which it exercises
jurisdiction but it does not extend beyond its territorial
jurisdiction. In other words, the decision of one High Court is
not a binding precedent for another High Court or for courts or
tribunals outside its territorial jurisdiction. The doctrine of
precedents and the rule of binding efficacy of the law laid down
by the High Court within its territorial jurisdiction, the
questions of law arising out of decision in a reference, has to be
determined by the High Court which exercises territorial
jurisdiction over the situs of the Assessing Officer and if it was
otherwise then it would result in serious anomalies as an
assessee affected by an assessment order at Bombay may
invoke the jurisdiction of the Delhi High Court to take
ITA No.148/12, 149/12 & 2/13 Page 10 of 13
advantage of a suitable decision taken by it. Thus, such an
assessee may avoid application of inconvenient law laid down
by the jurisdictional High Court of Bombay. On the basis of the
aforementioned reasoning, the Division Bench sustained the
objection that the jurisdiction to entertain the application under
sub-sections (1) and (2) of section 256 of the Act vested in the
High Court of Bombay and not of Delhi. We are in respectful
agreement with the aforementioned reasoning of the Delhi High
Court. Accordingly, we hold that the preliminary objection
raised by learned counsel for the assessee-respondent is
sustainable. It is true that transfer order under section 127 of the
Act has been passed on May 20, 2005, but it would not affect
the assessment framed by the Assessing Officer in respect of
the assessment year 1996-97. The reliance of the Revenue on
the Explanation to section 127 of the Act with regard to the
meaning of the expression "case" is wholly misplaced and is
liable to be rejected because section 120 of the Act does not
deal with jurisdiction of the Tribunal or the High Court."
After setting out the provisions of Section 120 and Section 127 of the said
Act, the Punjab & Haryana High Court in the case of Motorola India
(supra) observed as under:-
"A conjoint reading of the aforementioned provisions makes it
evident that the Director General or Chief Commissioner or
Commissioner is empowered to transfer any case from one or
more Assessing Officers sub-ordinate to him to any other
Assessing Officer. It also deals with the procedure when the
case is transferred from one Assessing Officer subordinate to a
Director General or Chief Commissioner or Commissioner to
an Assessing Officer who is not subordinate to the same
Director General, Commissioner or Commissioner. The
aforementioned situation and the definition of the expression
"case" in relation to jurisdiction of an Assessing Officer is quite
understandable but it has got nothing to do with the territorial
jurisdiction of the Tribunal or High Courts merely because
section 127 of the Act dealing with transfer has been
incorporated in the same Chapter. Therefore, the argument
ITA No.148/12, 149/12 & 2/13 Page 11 of 13
raised is completely devoid of sub-stance and we have no
hesitation to reject the same."
14. We are afraid and with respect we say so that we are unable to agree
with the views expressed by the Punjab & Haryana High Court and are
bound to follow the decision of this court in Sahara India (supra). We are
not inclined to accept the view taken by the Punjab & Haryana High Court,
because while it is true that the reference to the case is with regard to the
jurisdiction of an income-tax authority, it is also true that the jurisdiction of
the High Court is determined by the situs of the Assessing Officer. When
the Assessing Officer itself has been changed from one place to another, the
High Court exercising jurisdiction in respect of the territory covered by the
transferee Assessing Officer would be the one which would have
jurisdiction to hear the appeal under Section 260-A. Even in Ambica
Industries (supra), a decision relied upon by the learned counsel for the
respondent / assessee, it has been held that it would be the situs of the
Assessing Officer and not the situs of the Tribunal which would have the
determinative factor with regard to the jurisdiction of the High Court
hearing an appeal. Of course, the decision in Ambica Industries (supra)
was not one rendered under the Income-tax Act, but was one which
pertained to an appeal to the High Court under the Central Excise Act,
1944. We may also point out that the Central Excise Act does not deal with
a transfer of a `case' as is the position under the Income-tax Act. In any
event, there is nothing in Ambica Industries (supra), which would enable
us to take a view different from that taken by this court in Sahara India
(supra). It is a well accepted principle that there can be only one Assessing
ITA No.148/12, 149/12 & 2/13 Page 12 of 13
Officer in respect of a case. At the point of time when the present appeals
were filed, the Assessing Officer insofar as all the cases of the respondent
were concerned, was the Assessing Officer at Delhi. The fact that the
Amritsar Bench of the Tribunal had passed the impugned orders or the fact
that the initial assessment orders were passed by the Assessing Officer at
Jammu would not be relevant for the purposes of determining the
jurisdiction of the court at the point of time at which an appeal under
Section 260-A of the said Act is filed. It is the date on which the appeal is
filed which would be the material point of time for considering as to in
which court the appeal is to be filed. On the dates on which the present
appeals were filed, the Assessing Officer of the respondent was the
Assessing Officer at New Delhi and, therefore, this court would have
jurisdiction to entertain these appeals.
15. In view of the foregoing, we hold that the present appeals are
maintainable before this court. Consequently, we direct that the appeals be
listed before the roster bench hearing such matters on 22.07.2013 when the
appeals would be taken up for admission as well as for consideration of the
pending condonation of delay applications in two of the appeals.
BADAR DURREZ AHMED, ACJ
R.V. EASWAR, J
July 02, 2013
dutt
ITA No.148/12, 149/12 & 2/13 Page 13 of 13
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