|COURT:||Delhi High Court|
|CORAM:||S. Muralidhar J, Vibhu Bakhru J|
|SECTION(S):||10A, 10B, 253, Rule 27|
|CATCH WORDS:||alternate claim, exemption|
|DATE:||September 2, 2015 (Date of pronouncement)|
|DATE:||September 14, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 10A/ 10B: If Tribunal upholds Revenue's plea that assessee is not entitled to S. 10B, it must consider the assessee's alternate plea for s. 10A deduction even if such alternate plea has not been raised before the lower authorities|
In CIT v. Regency Creations Ltd.(2013) 353 ITR 326(Del), the High Court held that for the purposes of availing the benefit of Section 10B of the Act, the certification by the Board was mandatory and that such exemption could not be granted on the basis of the certificate issued by the Joint Director. Upon an application filed by the assessee in that case, the High Court directed the Tribunal to go into the merits of the alternative claim for entitlement under Section 10A. Based on the said direction, the present assessee filed a cross objection before the ITAT in the pending appeals of the Revenue seeking adjudication of its entitlement u/s 10A. However, the ITAT declined to permit the assessee to maintain the cross objections by following the decision of the coordinate Bench of the ITAT in ITO v. Neetee Clothing (P)Ltd.  129 TTJ 342 (ITAT [Del]), on the ground that since the Assessee had not urged the plea of being entitled to the benefit under Section 10 A of the Act before the CIT (A), it could not be permitted to urge such plea for the first time before the ITAT. On appeal by the assessee to the High Court HELD reversing the Tribunal:
(i) A respondent in an appeal, if he has not filed a cross-appeal, is deemed to be satisfied with the decision. He is, therefore, entitled to support the judgment of the first officer on any ground but he is not entitled to raise a ground which will work adversely to the appellant. In fact such a ground may be a totally new ground, if it is purely one of law, and does not necessitate the recording of any evidence, even though the nature of the objection may be such that it is not only a defence to the appeal itself but goes further and may affect the validity of the entire proceedings. But the entertainment of such a ground would be subject to the restriction that even if it is accepted, it should be given effect to only for the purpose of sustaining the order in appeal and dismissing the appeal and cannot be made use of, to disturb or to set aside, the order in favour of the appellant (See Bamasi v. CIT). This liberty to the respondent is reserved by Rule 27 of the Tribunal Rules.
(ii) As regards the powers of the Tribunal while disposing of the appeal, Rule 12 also lays down that the Tribunal, in deciding an appeal, is not confined to the grounds set forth in the memorandum of appeal or those which the appellant may urge with its leave. It can decide the appeal on any ground provided only that the affected party has an opportunity of being heard on that ground. But it has been laid down in a number of cases that this rule does not enable the Tribunal to raise a ground, or permit the party who has not appealed to raise a ground, which will work adversely to the appellant and result in an enhancement (CIT v. Edward Keventer (Successors) Pvt. Ltd. (1980) 123 ITR 200 followed);
(iii) The Supreme Court in NTPC v. CIT(1998) 229 ITR 383 SC has also explained that the power of the Tribunal in dealing with the appeals under Section 254 of the Act is “expressed in the widest possible terms”. It was further observed that “The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier.”
(iv) The basis of this Court remanding the matters in Valiant Communications Ltd. cases to the ITAT was precisely to consider whether the benefit under Section 10A could be granted to those Assessees notwithstanding that they may not be entitled to the benefit under Section 10B. It was, therefore, open to the Appellant Assessee herein to seek support of the order of the CIT (A) on the ground which was not urged before the CIT (A) as long as it was not going to be adverse to the case of the Appellant i.e. the Revenue before the ITAT. The ITAT in considering such plea was not going to be persuaded to come to a different conclusion as far as the appeal of the Revenue pertaining to the benefit under Section 10B of the Act was concerned. Particularly in the light of the order passed by this Court on 4th January 2013 in the applications filed by Valiant Communications Ltd., there should have been no difficulty for the ITAT to have examined the Appellant Assessee‟s cross objections.