Kanel Oil vs. JCIT (ITAT Ahmedabad Third Member)

Special Bench judgement may prevail over non-jurisdictional High Court judgement. Snowcem India 313 ITR 170 (Bom) may be per incuriam

The Tribunal had to consider whether an assessee liable to pay Minimum Alternate Tax u/s 115JA was also liable to pay interest u/ss 234B & 234C for short-fall in payment of advance tax. The Judicial Member followed the judgement of the Bombay High Court in Snowcem India Ltd 313 ITR 170 and held that interest u/ss 234B and 234C could not be levied when book profits was computed u/s 115JA. The Accountant Member dissented and followed the earlier judgement of the Special Bench in Ashima Syntex Ltd 117 ITD 1 where a contrary view was taken. The Third Member had to consider whether the judgment of a non-jurisdictional High Court would prevail over that of the Special Bench of the Tribunal. HELD by the Third Member:

(i) The view that the High Court is above the Tribunal in the judicial hierarchy and that the judgement of a non-jurisdictional High Court would prevail over that of the Special Bench is subject to two exceptions. The first exception is where there is only one judgment of a High Court on the issue and no contrary view has been expressed by any other High Court. But when there are several decisions of non-jurisdictional High Courts expressing contrary views, the Tribunal is free to choose that view which appeals to it and in certain circumstances the view which is favourable to the taxpayer may be adopted;

(ii) The second exception is where the judgment of the non-jurisdictional High Court, though the only judgment on the point, is ‘per incuriam’ i.e. is rendered without having been informed about certain statutory provisions or binding precedents that are directly relevant. A ‘per incuriam’ judgement need not be given effect to by a lower court;

(iii) In Snowcem India Ltd, the Bombay High Court decided in favour of the assessee following the precedents rendered in the context of s. 115J. However, its attention was not drawn to sub-sec (4) of 115 JA which, according to the department, makes all the difference between s. 115J and s. 115JA. Accordingly, the judgment cannot be relied upon by the assessee as being entirely in its favour on all the aspects of section 115JA and therefore it cannot be said that it should be followed in preference to the order of the Special Bench in Ashima Syntex;

(iv) Consequently, the judgement of the Special Bench had to be followed and it had to be held that the assessee was liable to pay interest u/ss 234B & 234C even when income was computed u/s 115JA.