Landmark Cases

Income Tax Reports Volume : 439

Appeal before the Tribunal—(i) Rectification of mistakes : Not only the mistakes of the
Tribunal, but also of the counsel of the parties
The power conferred on the Tribunal under section 254(2) is not only limited to rectification
of mistakes committed by the Tribunal but will also extend to a situation triggered on account
of a mistake of the counsel for the parties. This was the principle laid down in Federal Mogul
Goetze (India) Ltd. v. Asst. CIT [2021] 439 ITR 204 (Delhi).*
It reiterates the principle that the mechanism of rectification under section 254 is to solve the
problem, not to fix the blame.
*Among others, the decisions referred to were CIT (Asst.) v. Saurashtra Kutch Stock
Exchange Ltd. [2008] 305 ITR 227 (SC) ; Hiralal Bhagwati v. CIT [2000] 246 ITR 188 (Guj)
and Lachman Dass Bhatia Hingwala (P.) Ltd. v. Asst. CIT [2011] 330 ITR 243 (Delhi).
Appeal before the Tribunal—(ii) Power to remand to be used sparingly and not
routinely
Remand is not a power to be exercised in a routine manner and should be used sparingly as
an exception only when the facts warrant such course of action. Unless and until the Tribunal
finds an error in the approach of the Assessing Officer or the Commissioner (Appeals) and
only after interfering with such a finding can the Tribunal exercise its power of remand.
These were the observations in Pr. CIT v. Prabha Jain [2021] 439 ITR 304 (Mad). There are
many recent judicial decisions to the same effect.
Assessment—Exemption claim made for the first time through a belated revised return
filed after the assessment is complete held allowable
In an interesting case in Devendra Pai v. Asst. CIT [2021] 439 ITR 532 (Karn), the assessee,
a retired bank employee, who availed of the Reserve Bank of India’s Optional Early
Retirement Scheme, was paid superannuation benefit. In his return for assessment year 2004-
05, the assessee omitted to claim exemption under section 10(10C) on the superannuation
benefit amount. An assessment order was passed wherein the Assessing Officer stated that no
exemption under section 10(10CC) was claimed but only relief under section 89(1) was
claimed. Thereafter, the assessee made a representation to the Assessing Officer by a letter
stating that the amount of superannuation benefit was not taken into consideration for tax
exemption. When this was not responded to, he sought to file a revised return and filed an
application seeking condonation of delay under section 119(2)(b). The application was
rejected as time barred on the ground that Circular No. 9 of 2015 dated June 9, 2015
([2015] 374 ITR (St.) 25) of the Central Board of Direct Taxes did not permit condoning the
delay beyond the period of six years.
Allowing the writ petition, the court held that the assessee’s entitlement to exemption under
section 10(10C) was noticed by the Assessing Officer. The Assessing Officer’s observation
in his assessment order regarding exemption under section 10(10C) indicated that he was
aware of non-claiming of exemption by the assessee. Prima facie an order considering the
letter of the assessee as a rectification application and passing an order would be a legally
justifiable order. As no order was passed, the assessee had decided to explore the possibility
of filing a revised return. In view of Circular No. 014 (XL-35) and the peculiar facts of the
case, including that letter that could be construed to be a rectification application was not
decided, on the merits of the claim for exemption, the revised return could be considered. The
reasons assigned while seeking condonation of delay were satisfactory. The order rejecting
the condonation of delay under section 119(2)(b) was set aside and the delay was condoned.
As regards the grant of refund, eventually on account of the delay, there would be exclusion
of interest on the amount of refund.*
*The court referred to L. Hirday Narain v. ITO [1970] 78 ITR 26 (SC) and Ramco Cement
Distribution Co. Pvt. Ltd. v. Dy. CTO [1974] 33 STC 180 (Mad).
Benami Transactions Prohibition, 1988—A company cannot be considered as
“benamidar” and shareholders cannot be called “the beneficial owners”
If promoters of the company, namely, the shareholders, their relatives or individuals invest in
the company by way of giving land or by way of gift or in any other manner, then such
amounts or monies received would be part of the net worth of the company and the company
would be entitled to invest in any sector for which it has been formed. The persons who have
put monies in the company may be considered as shareholders but such shareholders do not
have the right to own properties of the company nor can it be said that the shareholders have,
by virtue of their shares in the company, invested their amount as benamidars. The
transactions of the company are independent transactions which are only for the purpose of
benefit of the company. It is a different aspect altogether that on account of benefit accruing
to the company, the shareholders would also receive benefit and they may be beneficiaries to
a certain extent. This would, however, not make the shareholders beneficial owners in terms
of the definition as provided under section 2(12) of the 1988 Act. A “company” as defined
under the Companies Act, 1956 and incorporated thereunder, therefore, cannot be treated as
“benamidar” as defined under the 1988 Act. The company cannot be said to be a benamidar
and its shareholders cannot be said to be beneficial owners within the meaning of the 1988
Act. These were the observations in Kalyan Buildmart Pvt. Ltd. v. Initiating Officer, Deputy
CIT [2021] 439 ITR 62 (Raj). One of the decisions referred to was the classic case of Mrs.
Bacha F. Guzdar v. CIT [1955] 27 ITR 1 (SC).
Business expenditure/disallowance—(i) Write-off of the principal amount of deposits
with a sister concern allowable as bad debt
The assessee made deposits in its sister concern in the financial year 2000-01. For assessment
year 2005-06, based on an interim assessment of the financial condition of the sister concern,
the assessee wrote off the outstanding of the principal amount of deposit and interest that had
accrued up to March 31, 2001 as bad debt in Pr. CIT v. Mahindra Engineering and Chemical
Products Ltd. [2021] 439 ITR 399 (Bom).
The Assessing Officer disallowed the claim for deduction of the principal amount of deposit
and the interest on the deposit on the ground that the assessee was not in the business of
lending money and, therefore, the deductions could not be allowed under sections 37 and
36(1)(vii). The Commissioner (Appeals) upheld the order of the Assessing Officer but the
Tribunal set aside the order of the Commissioner (Appeals).
Dismissing the Department’s appeal, the court held that the interest income of the assessee
for assessment year 2001-02 relating to the deposits made to the sister concern was brought
to tax as business income. Hence, the advances were to be understood as having been made in
the ordinary course of business. Therefore, one of the conditions required under section 36(2)
(i), i. e., that the debt or “part thereof” were taken into account in computing income of the
assessee for an earlier assessment year before such debt or part thereof was written off was
satisfied.* Since that part of the entire bad debt (consisting of the principal and interest both)
written off which related to the “interest” was offered for tax in the earlier year, a “part” of
the bad debt, i.e., interest, was offered for tax and, hence, the condition of section 36(2)(i)
stood satisfied.
Alternatively, it is submitted, the deduction of the principal amount of advances could have
been allowed as “loss incurred during the course of or incidental to business” under section
28/29.
*The court relied upon CIT v. Pudumjee Pulp and Paper Mills Ltd. (ITA No. 1590 of 2013
dated August 5, 2015 (Bom)) and CIT v. Shreyas S. Morakhia [2012] 342 ITR 285 (Bom).
Business expenditure/disallowance—(ii) Preliminary expenses under section 35D :
“Capital employed” includes share premium ? Cost of acquisition of companies
allowable ?
The share premium collected on the issue of share capital by the assessee could not be taken
as part of the “capital employed” for allowing deduction under section 35D. So was the
verdict in Subex Ltd. v. CIT [2021] 439 ITR 495 (Karn).*
It was also opined that when the preliminary expenses are allowed in the first year, the same
cannot be disallowed in the subsequent year by way of revision proceedings.**
It was further held that the cost of acquisition of companies cannot be allowed as expenditure
under section 35D.
*The court followed Berger Paints India Ltd. v. CIT [2017] 393 ITR 113 (SC)
**For this, the court followed Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. [2013]
356 ITR 460 (Guj).
Business expenditure/disallowance—(iii) Loss on revaluation/sale of bonds allowable as
business loss
The assessee, a sub-contractor of the Indian Railways, received certain bonds of the Reserve
Bank of India in satisfaction of its claim for the consideration receivable for the execution of
certain contracts in Iraq, which the assessee treated as current assets in its books of account in
CIT v. Bhageeratha Engineering Ltd. (No. 1) [2021] 439 ITR 704 (Ker). For assessment year
1996-97, the assessee claimed the loss on revaluation and actual loss on sale of Reserve Bank
of India bonds, which were disallowed both by the Assessing Officer and the Commissioner
(Appeals), but allowed by the Tribunal.
Dismissing the Department’s appeal, the court held that the Tribunal was right in deleting the
disallowance of loss on revaluation and loss on sale of Reserve Bank of India bonds. The
Tribunal had observed that the assessee was forced to accept the bonds in place of receivables
and had rightly held that the option could not be refused by the assessee or otherwise it
should have foregone the entire receivable amount. The assessee had got cash only upon sale
of the bonds. Till such time, the bonds could not be treated as capital asset and not even as
stock-in-trade. The assessee had recorded notional loss or profit on revaluation of the earlier
years and had followed such procedure in the subject assessment year 1996-97 also. There
was consistency in the pattern followed by the assessee and, considering the nature of its
business, the bonds were rightly treated as current assets. The option of treating the
receivables converted as bonds realizable at a future point of time was tenable.
However, the deduction under section 80HHB, claimed by the assessee, had to be
correspondingly reduced after reducing the loss on revaluation of bonds allowed to the
assessee. This was the decision in CIT v. Bhageeratha Engineering Ltd. (No. 2) [2021] 439
ITR 713 (Ker).
Charitable institutions—(i) Exemption under section 10(23C)(iiiad) : While computing
the prescribed limit, only activity-centric receipts to be considered, not voluntary
donations received
Section 10(23C)(iiiad) provided for exemption of any income received by any person on
behalf of any university or other educational institution existing solely for educational
purposes and not for the purposes of profit, if the aggregate annual receipts of such university
or educational institution do not exceed the prescribed monetary limit, which, for assessment
year 2007-08, was Rs. 1 crore*. The question considered in Manas Sewa Samiti v. Addl. CIT
[2021] 439 ITR 79 (All) whether the exemption under section 10(23C)(iiiad) could be denied
to the assessee by clubbing the voluntary contributions received by the assessee with the
receipts of the educational institution since, after clubbing, the amount exceeded Rs. one
crore.
Allowing the exemption, the court observed that the benefit of section 10(23C)(iiiad) being
activity-centric, the limit of Rs. 1 crore prescribed thereunder has to be seen only with
reference to the fee and other receipts of the eligible activity/institution. Admittedly, those
were below Rs. 1 crore. The eligibility condition prescribed by law was wholly met by the
assessee. The fact that the institution did not exist on its own and was run by the society
could never be a valid consideration to disallow that benefit. Merely because the assessee-
society was the person running the institution, it did not cause any legal effect of depriving
the benefit of section 10(23C)(iiiad) which was activity-specific and had nothing to do with
the other income of the same assessee. The Tribunal had also erred in looking at the
provisions of section 12AA and the fact that the donations received by the society may not
have been received with any specific instructions. It was not relevant in the facts of the
present case because here the assessee had only claimed the benefit of section 10(23C)(iiiad)
with respect to the receipts of the institution, and it had not claimed any benefit with respect
to the donations received by the society. There could be no clubbing of the receipts of the
institution with the other income of the society, for the purpose of considering the benefit of
section 10(23C)(iiiad).**
*This limit has been raised to Rs. 5 crores from April 1, 2022. Further, with effect from April
1, 2022, for calculating this limit of Rs. 5 crores, all receipts of the assessee are to be
aggregated, and receipt of each institution run by the assessee is not be considered separately.
**The court concurred with CIT v. Children’s Education Society [2013] 358 ITR 373 (Karn)
and Vivekanand Society of Education and Research v. CIT (ITA No. 23/2014 dated
December 29, 2017).
Charitable institutions—(ii) Selection between section 10(23C) and section 10(46)
It was observed in Telangana State Pollution Control Board v. CBDT [2021] 439 ITR
744 (Telangana)* that though there were two different provisions under which the assessee
could claim the benefit, the mere fact of the assessee being granted approval under section
10(23C)(iv) would not disentitle the assessee to seek to be notified under section 10(46), as it
was for the assessee to choose which of the provisions would be more beneficial**. If it were
to be held that the power to “withdraw” was the prerogative of the Department and the
assessee could not seek to surrender the approval granted to it under section 10(23C)(iv), it
would amount to giving a restrictive meaning to the word “withdrawal”, that is to say, only at
the behest of the prescribed authority, and that would be contrary to the harmonious
interpretation of the provision required to be undertaken. On the other hand, if the stand of
the Department that once the exemption was granted, it could only be withdrawn by the
authority granting exemption and such withdrawal could not be sought by the assessee, was
accepted, it might result in an assessee, who, in a given situation having sought grant of
approval under section 10(23C)(iv), continuing to retain such approval, even though it was
not complying with the provisions of the Act for availing of the exemption. The assessee,
while applying for exemption and seeking to be notified under section 10(46), had also
offered to surrender the approval obtained by it under section 10(23C)(iv) on being notified.
The Department did not take any action on the application filed by the assessee for being
notified under section 10(46) nor communicated the reason for not considering the
applications for nearly three years. The understanding of the Department that the power to
withdraw conferred under section 293C or section 10(23C)(iv) was to be undertaken only at
the behest of the Department and not at the request of the assessee, was not a correct
understanding. The assessee had not sought grant of exemption under section 10(46) either
from the day the provision was introduced or from the date of the initial grant of approval
under section 10(23C) and had sought to be notified under section 10(46) only from the
relevant previous year, having regard to the fact that the benefit of exemption under section
10(23C) was being denied regularly and on the ground that section 10(46) was more
beneficial and applicable more aptly. The Department was directed to withdraw the approval
granted to the assessee under section 10(23C) with effect from the date of application made
by the assessee for being notified under section 10(46) and process the assessee’s application
filed for being notified under section 10(46) in accordance with the provisions from the
previous year relevant to the date the application was filed.
*Also discussed at serial Nos. (iii), (iv) and (v) under “General” ante.
**For which the court relied upon Collector of Central Excise v. Indian Petro Chemicals
[1997] 11 SCC 318 and H. C. L. Ltd. v. Collector of Customs [2001] 9 SCC 83.
Deduction under section 80HHC—Section 80HHC versus section 80-IA
In view of section 80-IA(9) [read with section 80-IB(13)], if an assessee is allowed deduction
under section 80-IA (or section 80-IB) on the ground of it being an eligible business
undertaking, it cannot be allowed a further deduction of the entire profits and gains claimed
under section 80HHC also. Therefore, the profits and gains allowed as deduction under
section 80-IB have to be excluded while computing the deduction under section 80HHC.
These were the views expressed in Kanam Latex Industries Pvt. Ltd. v. CIT [2021] 439 ITR
218 (Ker).
Exemption under section 10B—Not available to blending of tea as it does not amount to
manufacture
Blending of tea does not amount to manufacture and, hence, not eligible for exemption under
section 10B. This was the decision in Pr. CIT v. V. N. Enterprises Ltd. [2021] 439 ITR
624 (Cal), following CIT v. Tara Agencies [2007] 292 ITR 444 (SC).
General—(i) Business : Meaning*
See CIT v. Premier Tyres Ltd. [2021] 439 ITR 346 (Ker), discussed under “Income” post.
*Advocate, High Court, Mumbai (B.Com., LL.B., F.C.A.).
General—(ii) Trust : Meaning
The word “trust” first of all is not defined under the Act or the General Clauses Act, 1897.
The word “trust” has to be interpreted according to its general meaning. “Trust” is defined in
section 3 of the Indian Trusts Act, 1882 to be an obligation annexed to the ownership of the
property and arising out of confidence reposed in and accepted by the owner or declared and
accepted by him for the benefit of another, or of another and the owner. A trust can be an
Indian trust or a foreign trust. These were the observations in Abu Dhabi Investment
Authority v. Authority for Advance Rulings (Income-tax) [2021] 439 ITR 437 (Bom) in the
context of sections 61 and 63, discussed in detail under “Non-resident taxation” post.
General—(iii) Meaning of the word “provided”
The word “provided” has been defined as follows : “A clause beginning with this word is
usually termed a proviso. It may have various effects. Sometimes it is to be taken for a
condition, sometimes for an explanation, sometimes for a covenant, sometimes for an
exception, sometimes for a reservation”. These were the observations in Telangana State
Pollution Control Board v. CBDT [2021] 439 ITR 744 (Telangana), discussed in detail at
serial No. (ii) under “Charitable institutions” post.
General—(iv) Meaning of the word “withdraw”
The term “withdraw” as used in the fifteenth proviso to section 10(23C)(iv) and in section
293C has a wider connotation and cannot be construed in a restrictive manner. The word
“withdraw” as used in both the sections 10(23C)(iv) and 293C encompasses in itself the
exercise of power even at the behest of the assessee. These were the observations in
Telangana State Pollution Control Board v. CBDT [2021] 439 ITR 744 (Telangana)*,
discussed in detail at serial No. (ii) under “Charitable institutions” post.
*For the meaning of the word “withdraw” the court referred to Kalabharati Advertising v.
Hemant Vimalnath Narichania [2010] 9 SCC 437.
General—(v) Meaning of the word “also”
The word “also” used in conjunction connotes a meaning. In Samee Khan v. Bindu Khan
[1998] 7 SCC 59, the Supreme Court by referring to Black’s Law Dictionary held that the
word “also” has a variety of meanings like “Besides ; as well ; in addition ; likewise ; in like
manner ; similarly ; too ; withal”. These were the observations in Telangana State Pollution
Control Board v. CBDT [2021] 439 ITR 744 (Telangana), discussed in detail at serial No. (ii)
under “Charitable institutions” post.
General—(vi) Refund of tax without filing an appeal for the subsequent years merely
because the appeal for the earlier year is allowed ?
See Mohandas Isardas Chatlani v. ITO (International Taxation) [2021] 439 ITR 577 (Bom),
discussed in detail under “Wealth-tax” post.
High Court—Department’s writ petition against Tribunal’s order on interest under
section 234E not maintainable ; general principles regarding writ petition
The Department filed a writ petition against the Tribunal order pertaining to an issue under
section 234E, when there was an alternative remedy by way of an appeal available under
section 260A but such appeal was not maintainable as the tax effect involved was less than
the monetary limit prescribed by the circular* of the Central Board of Direct Taxes read with
section 268A in CIT v. Emsons Exim Pvt. Ltd. [2021] 439 ITR 607 (Bom)**.
Dismissing the writ petition, the court held that an appeal against an order passed by the
Tribunal under section 234E was maintainable under section 260A. The circular of the
Central Board of Direct Taxes provides that no appeal shall be filed in the High Court where
the tax effect is less than the monetary limit of Rs. one crore. The tax effect involved in the
writ petition was below the monetary limit of Rs. one crore. On the facts of the case, none of
the exceptions as laid down by the Supreme Court in the case of Radha Krishan Industries v.
State of Himachal Pradesh [2021] 88 GSTR 229 (SC)*** had been fulfilled.
However, even though an alternative remedy by way of an appeal is available against an
assessment order under section 143(3), the assessee’s writ petition against the assessment
order was held maintainable in V. Thillainatesan v. Addl. CIT [2021] 439 ITR 614 (Mad)#
since no opportunity of being heard was afforded to the assessee and there was violation of
the principles of natural justice. But, see the fate of the assessee’s writ petition in Aiman
Education and Welfare Society v. National Faceless Appeal Centre [2021] 439 ITR
651 (Mad) when the assessee rushed to the High Court by way of a writ petition without first
approaching the Assessing Officer under section 220(6).
*Circular No. 17 dated August 8, 2019 [2019] 416 ITR (St.) 106) by the Central Board of
Direct Taxes.
**None appeared for the assessee in this case.
***In this case, the Supreme Court has lucidly summarized the principles of law relating to a
writ petition.
#In this case, too, a reference was made to the Supreme Court decision in Radha Krishan
Industries v. State of Himachal Pradesh [2021] 88 GSTR 228 (SC), referred to hereinabove.
 Income—(i) Lease rent on the entire plant : Whether business income ?
The assessee was a company engaged in the manufacture and sale of tyres in CIT v. Premier
Tyres Ltd. [2021] 439 ITR 346 (Ker)*. Since the assessee had business loss in excess of the
paid-up capital, it moved an application under section 15 of the Sick Industrial Companies
(Special Provisions) Act, 1985 before the Board for Industrial and Financial Reconstruction
(“the BIFR”) for framing scheme under the 1985 Act. In the scheme framed by the Board for
Industrial and Financial Reconstruction to help the assessee, it provided for lease of the entire
production unit of the assessee. The question was whether rent received by the assessee for
leasing the entire plant constituted its business income or income from other sources. The
court held that the scheme was for providing a solution to the business problem of the
assessee. The claim of lease rental receipt as business income was justifiable. The court
observed that the assessee was obligated to work under a statutory approved scheme. The
lease of eight years was to ATL, which was in the same business and the lease was for
utilising the plant, machinery, etc. for manufacturing tyres. The actuals were reimbursed to
the assessee by ATL and the workforce of the assessee had been deployed for manufacturing
tyres. The total production from the assessee unit was taken over by ATL.
The court also laid down the tests to determine what “business” is by observing that the word
“business” in section 14 is not a word of art, but a word of commercial implication.
Therefore, in any given year or situation, the activity claimed by the assessee is neither
accepted through interpretative or expressive narrative of the activity claimed by the assessee,
nor is the claim for business income refused through the prism of the Revenue. The bottom
line is the availability of assets, activities carried for exploiting the assets, that the assessee is
not a mere onlooker of the activities in the company or a passive recipient of rent for
utilization of facilities other than business assets. The net income of business pre-supposes
computation of income after allowing permissible expenses and deductions in accordance
with the Act. Therefore, denying eligible deductions or expenses treating the business activity
as any other activity is illegal. The circumstances, therefore, are weighed in an even scale by
the authority or court while deciding whether the activity stated by the assessee merits
inclusion as income from business or other sources. These controversies are determined not
only on case-to-case basis, but also on year-to-year basis as well.
*See also PTL Enterprises Ltd. v. Dy. CIT [2021] 439 ITR 365 (Ker) wherein the effect of
the decision in Universal Plast Ltd. v. CIT [1999] 237 ITR 454 (SC) was explained.
Interest under section 220(2)—No interest under section 220(2) on the interest paid
under section 244A
Interest under section 244A was paid by the Department for the delay caused in giving refund
due to the assessee in CIT v. ABB Ltd. [2021] 439 ITR 554 (Karn). It was held that interest
on the interest paid under section 244A not being provided under the statute, the Tribunal
rightly held that the Assessing Officer shall recompute the interest chargeable under section
220(2) by reducing only the principal amount of tax from the refund granted earlier and not
charge interest on the interest granted earlier under section 244A.
Interest under section 234E
See CIT v. Emsons Exim Pvt. Ltd. [2021] 439 ITR 607 (Bom), discussed in detail under
“High Court” post.
Non-resident taxation—The assessee entitled to the benefits of the tax treaty with the
UAE though investment routed through a trust in Jersey
Following were the facts in Abu Dhabi Investment Authority v. Authority for Advance
Rulings (Income-tax) [2021] 439 ITR 437 (Bom) :
(a) Income earned through the assessee’s investment in the Indian debt portfolios directly
would have been exempted under article 24 of the Double Taxation Avoidance Agreement
with the UAE (“DTAA”).
(b) The assessee was registered as a foreign institutional investor and later foreign portfolio
investor with the Securities and Exchange Board of India (“SEBI”).
(c) The assessee had made a capital commitment of USD 200 million in the trust in the
capacity of the settlor of the trust, and ETL was the trustee of the trust.
(d) The assessee was also the sole beneficiary of the trust.
(e) The assessee did not have any permanent establishment or fixed place of business or any
other form of presence in India and did not have any business connection or operations in
India.
On such facts, the assessee returned nil income invoking the benefit of article 24 of the
Double Taxation Avoidance Agreement. The Authority for Advance Ruling (“AAR”) denied
the said benefit holding, inter alia, as follows :
(a) The trust was registered in Jersey and there was no treaty between India and Jersey.
(b) Sections 61 and 63 would apply only to those trusts which fell under the Indian Trusts
Act, 1882 and the trust did not meet the definition, characteristics and features of trust as per
Indian law.
(c) India had not ratified the Hague trust convention of July 1, 1985 and, hence, trust laws of
foreign jurisdictions were not applicable in India.
(d) The settlor could not be the sole beneficiary.
(e) Sections 60 to 64 were designed to overtake and circumvent the counter design by a
taxpayer to reduce its tax liability by parting with its property in such a way that the income
would no longer be received by him but at the same time he retained certain powers over the
property or income.
(f) Though section 160(1)(i) or (iv) provides that a trustee can be a representative assessee, in
this case, the trustee being a resident of Jersey could not be an agent of the assessee.
(g) No authority or material had been placed before the Authority for Advance Rulings to
suggest that section 161 would be applicable to a foreign trust or trustee.
(h) The assessee’s representative could not satisfactorily answer the query as to why the
assessee would like to route its investment in non-convertible debenture funds through Jersey
route for investment in Indian market and the assessee itself being a registered foreign
institutional investor could have directly invested in Indian portfolios and taken advantage of
article 24 of the Double Taxation Avoidance Agreement.
(i) As the assessee was receiving income through a device and not from direct or immediate
receipt, the income received from Indian debt investment was not derived by the assessee and
did not fall under article 24 of the Double Taxation Avoidance Agreement.
(j) There was a proposed amendment (it has come into effect only from April 1, 2021) which
supported the view that if an entity is a resident of the UAE and through this entity the
assessee was in receipt of some income then the income would be exempted from tax under
section 10 and the proposed amendment suggested that indirect accrual of income is not
eligible for treaty benefit.
Allowing the assessee’s writ petition and overruling* the ruling of the Authority for Advance
Rulings, the court held as follows :
(a) Section 61 provides that any income arising to any person by virtue of a revocable transfer
shall be chargeable to tax as the income of the transferor. The deed of settlement and
particularly clauses from the deed of settlement showed that there was a revocable transfer by
the settlor, i. e., the assessee, to the trustee ETL, and as such any income arising to the trustee
should be chargeable in the hands of the assessee. The word “trust” in section 63 covers all
trusts within its ambit. The Hague trust convention does not decide the issue one way or the
other. There was nothing to even suggest in the ruling of the Authority how the ratification of
the Hague trust convention would affect the status of foreign trusts in India. Even a foreign
trust is a trust under the Act and the income-tax return form prescribed under the Act requires
the details of the trust created under the laws of a country outside India. The trust created in
terms of the deed of settlement was consistent with the requirements of both, the Indian
Trusts Act as well as the Trust (Jersey) Law, 1984 as to what constitutes a trust. The Act does
not make any provision that the settlor cannot be the sole beneficiary.
(b) There is no provision under the Indian Trusts Act which debars the settlor from being a
beneficiary. In the present instance, the settlor was not the trustee but was the sole
beneficiary, which was clearly permissible.
(c) If the assessee had invested the amount directly, the income derived from such investment
would be exempted under article 24 of the Double Taxation Avoidance Agreement. The
assessee had not created the trust to avoid tax. The assessee had routed its investment in
certain instruments through the trust only for commercial expediency. This assessee had
explained in detail to the Authority for Advance Rulings why it had routed its investment in
non-convertible debentures through the Jersey route for the India market. The Act does not
provide anywhere that only a trustee, who is resident of India, can be an agent under section
160. Even if the trust were based out of Jersey and the trust was settled in Jersey, the assessee
being the settlor and the sole beneficiary of the trust and resident of the UAE, in terms of
article 24 of the Double Taxation Avoidance Agreement the income, which arose to it by
virtue of investment in Indian portfolio companies, would be governed by the beneficial
provisions of the Double Taxation Avoidance Agreement. To take it further, even if the trust
structure were to be discarded, it must necessarily follow that the investment must be
regarded as having been made by the assessee and, hence, the income would arise in the
hands of the assessee, and such income would be non-taxable in India by virtue of the
provisions of the Double Taxation Avoidance Agreement. There was no attempt whatsoever
to reduce the tax liability by using the trust structure. When the provisions of the trust deed
provided that the assessee had the right to reassume power over the entire income arising on
the investments made by the trust in the portfolio companies, the entire income arising
therefrom had, in terms of section 61, to be assessed in the hands of the assessee. This would
mean that the exemption under article 24 of the Double Taxation Avoidance Agreement
would be attracted.
(d) Even if the income is taxed in the hands of the trustee in terms of section 161(1), it will be
taxed in the “like manner and to the same extent” as the beneficiary. Once again, the assessee
was the sole beneficiary of the trust and income assessed in the hands of the trustee would
take colour of the assessee’s income and thereby the benefit of the Double Taxation
Avoidance Agreement must be granted.
(e) The assessee could reassume the power and, hence, the contribution to the trust was a
revocable transfer thereby making the income arising to the trust taxable in the hands of the
assessee which was exempt under article 24 of the Double Taxation Avoidance Agreement.
(f) The income that accrued to the trust would not be chargeable to tax in India either by
virtue of application of section 61 read with section 63 or section 161 conjointly with article
24 of the Double Taxation Avoidance Agreement.
Prosecution—Presumption of culpable mental state : Burden on the assessee to prove
his innocence
For non-filing of income-tax return, prosecution was initiated against the assessee under
section 276CC read with section 278E in Raman Krishna Kumar v. Dy. CIT [2021] 439 ITR
521 (Mad).
In a writ petition challenging the prosecution, the assessee laid the blame on his previous
employer stating that there had been a mismatch in the income earned as given in form 16
and that uploaded in form 26AS and that this was not brought to the knowledge of the
assessee since he had left employment. He stated that even though the show-cause notices
had been received, he was under the bona fide impression that since tax had been paid, no
further action was required to be clarified from his end. However, it was the consistent case
of the Department that the assessee had not explained the high-level transactions in purchase
and sale of units of mutual funds and transactions in credit cards.
Dismissing the writ petition, the court held that the Supreme Court* has very clearly stated
that filing the return within the stipulated and mandatory period is a duty cast on any person,
who has to declare the income. It also held that the provisions are mandatory in nature and if
the returns are not filed within the stipulated period, a presumption as to culpable mental state
can be drawn under section 278E. It held that in a prosecution for an offence such as that
under section 276CC, there can be a presumption of existence of mens rea and it is for the
accused to prove the contrary and that too, beyond reasonable doubt. The claim of the
assessee that he was innocent and ignorant and, therefore, indulgence should be granted to
him is actually a fact which should be proved by him in a court of law. The platform for
establishing such innocence is the court where the trial is to be conducted.
*Sasi Enterprises v. Asst. CIT [2014] 361 ITR 163 (SC).
Reassessment—(i) Notice under section 148 issued after April 1, 2021 under the pre-
2021 law : Invalid
The question whether a notice issued after April 1, 2021 under the old pre-2021 section 148
is valid has been debated currently in various courts. Recently, the Chhatisgarh High Court
held such notice to be valid in view of the extension of time under various Government
notifications due to Covid-19 in Palak Khatuja v. Union of India [2021] 438 ITR
622 (Chhattisgarh)* and Anant Rice Industries v. Union of India [2021] 439 ITR
275 (Chhattisgarh).
Dissenting from the above view, the Allahabad High Court has held such notice to be invalid
in Ashok Kumar Agarwal v. Union of India [2021] 439 ITR 1 (All), while disposing of a
bunch of writ petitions in favour of the assessee. Quashing all the notices under section 148
issued after April 1, 2021 as invalid, the court held that the Revenue authorities had admitted
that all the reassessment notices involved in this batch of writ petitions had been issued after
the enforcement date April 1, 2021. As a fact, no jurisdiction had been assumed by the
assessing authority against any of the assessee under the unamended (old) law. Hence, no
time extension could be made under section 3(1) of the 2020 Act** read with the
notifications issued thereunder.
Explaining the effect of the substitution of the new section 148A, etc. in place of the old
section 148, etc. with effect from April 1, 2021, the court observed that an act of legislative
substitution is a composite act. It involves simultaneous omission and re-enactment. By its
very nature, once a new provision has been put in place of a pre-existing provision, the earlier
provision cannot survive, except for things done or already undertaken to be done or things
expressly saved to be done. By virtue of section 1(2)(a) of the Finance Act, 2021, sections
147, 148, 149, 151 (as they existed up to March 31, 2021) stood substituted, and a new
provision was enacted by way of section 148A, which mandated that the Assessing Officer,
before issuing any notice under section 148A shall conduct an enquiry, if required, with the
prior approval of the specified authority and provide an opportunity of being heard to the
assessee.
The court explained how the 2020 Act could not save the impugned notices by observing that
the 2020 Act had been passed to deal with situations arising due to the pandemic. This
enabling Act that was pre-existing and enforced prior to enforcement of the Finance Act,
2021 on April 1, 2021. In the 2020 Act and the Finance Act, 2021, there is absence, both of
any express provision in itself or to delegate the function to save applicability of section 147,
148, 149 or 151, as they existed up to March 31, 2021. Plainly, the 2020 Act is an enactment
to extend timelines only. Consequently, it flows that April 1, 2021 onwards all references to
issuance of a notice contained in the 2020 Act must be read as reference to the newly
substituted provisions only.
The court further observed that the submission that section 3(1) of the 2020 Act gave an
overriding effect to that Act and, therefore, saved the provisions as they existed under the
unamended law, cannot be accepted. That saving could arise only if jurisdiction had been
validly assumed before the date April 1, 2021. In the first place, section 3(1) of the 2020 Act
does not speak of saving any provision of law. It only speaks of saving or protecting certain
proceedings from being hit by the rule of limitation. That provision also does not speak of
saving any proceeding from any law that may be enacted by Parliament in future. Even
otherwise the word “notwithstanding” creating the non obstante clause does not govern the
entire scope of section 3(1) of the 2020 Act. It is confined to and may be employed only with
reference to the second part of section 3(1) of the 2020 Act, i. e., to protect proceedings
already under way. Hence, the 2020 Act only protected certain proceedings that may have
become time barred on March 20, 2020, up to the date June 30, 2021. In the absence of any
specific delegation, to allow the delegate of Parliament to indefinitely extend such limitation
would be to allow the validity of an enacted law, i.e., the Finance Act, 2021, to be defeated
by a purely colourable exercise of power by the delegate of Parliament.
Rejecting the argument of invoking the mischief rule, the court observed that only in case of
any doubt existing as to which of the two interpretations may apply or as to the true
interpretation of a provision, the court may look at the mischief rule to find the correct law.
However, where plain legislative action exists, as in the present case (whereunder Parliament
has substituted the old provisions regarding reassessment with new provisions with effect
from April 1, 2021), the mischief rule has no application.
The court further observed that a delegated legislation can never overreach any Act of the
principal Legislature. In the absence of any specific clause in the Finance Act, 2021, either to
save the provisions of the 2020 Act or the notifications issued thereunder, by no interpretative
process can those notifications be given an extended run of life beyond March 31, 2020. They
may also not infuse any life into a provision that stood obliterated from the statute with effect
from March 31, 2021. Inasmuch as the Finance Act, 2021 does not enable the Central
Government to issue any notification to reactivate the pre-existing law (which that principal
Legislature had substituted), the exercise by the delegate/Central Government would be de
hors any statutory basis. In the absence of any express saving of the pre-existing laws, the
presumption drawn in favour of that saving is plainly impermissible. Also, no presumption
exists that by notification issued under the 2020 Act, the operation of the pre-existing
provision of the Act had been extended and thereby section 148A (introduced by the Finance
Act, 2021) and other provisions had been deferred.
*Discussed in “Landmark Cases” [2021] 438 ITR (Journal) 62, 76.
**The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act,
2020.
Reassessment—(ii) No reassessment in the absence of tangible material, etc.
While quashing a notice for reassessment under section 148, the settled principles about the
jurisdictional pre-conditions to be fulfilled for re-opening the assessment under the old (up to
March 31, 2021) sections 147, 148, etc. were reiterated in Jainam Investments v. Asst. CIT
[2021] 439 ITR 154 (Bom) in the following manner :
(a) The Assessing Officer cannot reopen an assessment even within a period of four years
merely on the basis of change of opinion. The Assessing Officer has no power to review an
assessment which has been concluded.
(b) Where he has tangible material to come to the conclusion that there is an escapement of
income from assessment, the power to reopen can be exercised. What is tangible is something
which is not illusory, hypothetical or a matter of conjecture. A general or bald statement is
not enough.
(c) The reasons for reopening an assessment have to be tested or examined only on the basis
of the reasons recorded at the time of issuing the notice under section 148. These reasons
cannot be improved upon or supplemented much less substituted by an affidavit or oral
submissions. The reasons for reopening an assessment should be those of the Assessing
Officer alone who is issuing the notice and he cannot act merely on the dictates of any
another person in issuing the notice. The tangible material upon the basis of which the
Assessing Officer comes to entertain reasons to believe that income chargeable to tax has
escaped assessment can come to him from any source, but the reasons for the reopening have
to be only of the Assessing Officer issuing the notice.
One may also see in this connection Ananta Landmark Pvt. Ltd. v. Dy. CIT [2021] 439 ITR
168 (Bom) and Pr. CIT v. EPC Industries Ltd. [2021] 439 ITR 210 (Bom)* and Kalpataru
Ltd. v. Dy. CIT [2021] 439 ITR 284 (Bom).
*The court followed in these cases Aroni Commercials Ltd. v. Asst. CIT [2014] 367 ITR 405
(Bom) and Marico Ltd. v. Asst. CIT [2020] 425 ITR 177 (Bom) and also relied upon CIT v.
Kelvinator of India Ltd. [2010] 320 ITR 561 (SC).
Salaries—For valuation of perquisites, employees of a Government-controlled body are
not entitled to be treated on par with the Government employees
The Council for Scientific and Industrial Research is a premier industrial research and
development organization, which was constituted by a resolution of the erstwhile Central
Legislative Assembly in the year 1942 and is an autonomous body registered under the
Societies Registration Act, 1860. The employees of the assessee are governed by the
Government of India pay and allowance rules, conduct rules and other rules as is applicable
to Central Government employees. A provision for reservation for post in services in the
assessee’s society is made in accordance with the orders of the Government of India. The
employees of the assessee were allotted unfurnished quarters. In Central Food Technological
Research Institute v. ITO [2021] 439 ITR 735 (Karn), the assessee contended* that valuation
of perquisites under rule 3 of the Income-tax Rules should be worked out considering the
employees of the assessee to be on par with the Government employees. The Assessing
Officer passed orders under sections 201(1) and 201(1A) read with section 192 for
assessment years 2007-08 to 2011-12 holding that the assessee had not correctly worked out
the perquisite value of accommodation in accordance with the amended rule 3 of the Rules
and the assessee was liable to be treated as an assessee-in-default under section 201(1) for
non-deduction or short-deduction of tax at source. He also charged interest under section
201(1A). This was upheld by the Commissioner (Appeals) and the Tribunal.
Deciding the issue in favour of the Department**, the court held that merely because the
assessee was a body or undertaking owned or controlled by the Central Government, it could
not be elevated to the status of the Central Government. The assessee could not claim that
valuation of the perquisite in respect of residential accommodation should be computed as in
the case of an accommodation provided by the Central Government. Therefore, entry 1 of
Table 1 of rule 3 of the Rules would not apply to the assessee.
But the court gave some relief by holding that the assessee had made a bona fide estimate of
the employees’ salary by valuing the perquisite in the form of residential accommodation
provided to the employees by valuing it as if they were the employees of the Central
Government. Hence, proceedings under sections 201 and 201(1A) were not justified.
*In support of its contention, the assessee relied upon Pradeep Kumar Biswas v. Indian
Institute of Chemical Biology [2002] 5 SCC 111 ; R. D. Shetty v. International Airport
Authority AIR 1979 SC 1628 ; P. V. Rajagopal v. Union of India [1998] 233 ITR 678 (AP)
and CIT v. Municipal Corporation, Vishakapatnam [2014] 365 ITR 254 (AP).
**In support of its contention, the Department relied upon Arun Kumar v. Union of India
[2006] 286 ITR 89 (SC).
Tax deduction at source—(i) No deduction of tax at source under section 194D from
foreign travelling expenses incurred for insurance agents
The Assessing Officer noticed that the assessee had incurred foreign travel expenses for its
agents, who were working for soliciting or procuring insurance business for the assessee, and
opined that foreign travel expenses incurred by the assessee on its agents were covered under
the words “income by way of remuneration or reward whether by way of commission or
otherwise” used in section 194D. Since the assessee had not deducted tax at source, the
Assessing Officer treated the assessee as an assessee-in-default. The order was set aside by
the Commissioner (Appeals) and this was affirmed by the Tribunal.
Dismissing the Department’s appeal, the court held that under section 194D the obligation to
deduct is on the person who is paying and the deduction is to be made at the time of making
such payment. Factually and admittedly no amount had been paid to the agents by the
assessee as a reimbursement of expenses incurred by the agent on foreign travel. The assessee
had made arrangement for foreign travel for all the agents and paid expenses directly to those
service providers. Therefore, as no amount was paid to the agents by the respondent, the
obligation to deduct income-tax thereon at source also would not arise.*
*The court referred to CIT v. Reliance Life Insurance Co. Ltd. [2019] 414 ITR 551 (Bom).
Tax deduction at source—(ii) No deduction of tax at source under section 194H from
expenditure towards air fare, taxi fare, etc. of doctors
Pursuant to a survey under section 133A carried out at the premises of the assessee in CIT
(TDS) v. Intas Pharmaceuticals Ltd. [2021] 439 ITR 692 (Guj), e-mails and other
correspondence that ensued between the sales executive and the general manager suggested
that the doctors had acted as the agents of the assessee by prescribing the medicines of the
assessee over a period of time and, therefore, expenses incurred by the assessee on the
doctors towards taxi fares, air fares, etc. for attending regional conferences or scientific
conferences were required to be treated as commission received or receivable as
contemplated under section 194H. The Assessing Officer treated the assessee as an assessee-
in-default under section 201(1) for non-deduction of tax at source under section 194H from
such payments. The Commissioner (Appeals) restricted the addition to expenditure incurred
on the doctors under various heads and held that the expenses incurred on other stakeholders
did not fall within the definition of the term “commission”.
Dismissing the Department’s appeal, the court held that in the absence of an element of
agency between the assessee and the doctors, section 194H could not be invoked. The doctors
were not bound to prescribe the medicines as suggested by the assessee. There was no legal
compulsion on the part of the doctors to prescribe a particular medicine suggested by the
assessee and, therefore, the doctors had not acted as the agents of the assessee.
Tax deduction at source—(iii) Employees of a Government controlled body not
employees of the Central Government for deduction of tax under section 192 on the
perquisite value of residential accommodation ; but order under sections 201 and 201
(1A) held invalid
See Central Food Technological Research Institute v. ITO (TDS) [2021] 439 ITR 735 (Karn),
discussed under “Salaries” ante.
Transfer of case under section 127—Transfer of case invalid since passed without a
personal hearing to the assessee and without recording satisfactory reasons for the
transfer
The assessee in Darshan Jitendra Jhaveri v. CIT (International Taxation) [2021] 439 ITR
514 (Bom) received intimation under section 127(1) informing him that subsequent to a
search and seizure operation conducted under section 132 in one S group of companies, the
assessee’s case was proposed to be centralized with the Assistant Commissioner (Central)
Circle, Goa. The assessee sent a reply stating that his only transaction with S group was
purchase of iron ore by his companies based in the British Virgin Islands during the period
before 2012, which was exported from India by S group, that all payments were made
through banking channels and that he had stopped dealing with S group in or about June-July
2012 and his assessments had been completed until assessment year 2018-19. The assessee
further stated that he was at a loss to effectively defend his case in the absence of any reasons
or grounds disclosed in the notice as to how he was connected with S group as alleged.
Ignoring the assessee’s request for a personal hearing before any decision in the matter, the
Commissioner passed an order under section 127(2) holding that the assessee had stated that
transferring his case to Goa would create genuine hardship to him, which was not acceptable
since the assessee was connected with S group, but the order did not state any details as to
how the assessee was connected with S group.
Allowing the assessee’s writ petition and quashing the transfer order, the court held that the
notice issued was under section 127(1) when all the applicable provisions were under section
127(2)(a). Sub-section (1) of section 127 was not applicable since the transfer proposed was
from one Commissionerate to another Commissionerate. The order was passed without
granting a personal hearing though the assessee had requested one and sub-section (2)(a) of
section 127 required that such an order could be passed after giving the assessee a reasonable
opportunity of being heard in the matter and after recording his reasons for doing so. Even
though in the order the Commissioner (International Taxation) had stated that the assessee
was provided the opportunity under section 127(1), he had exercised his powers under section
127(2), which showed his non-application of mind. He had failed to deal with all the points
raised by the assessee in his reply. Moreover, the notice itself was defective as it had been
issued by the Income-tax Officer (International Taxation) and not by the Commissioner who
exercised his power. In the intimation, apart from stating “you are connected to this group”
there were no other details as to how the assessee was connected to the searched party, S
group. The word “connected” has a varied and wide meaning. The Department ought to have
mentioned in the notice as to how the assessee was connected to the searched party. The
contention of the Department that the assessee should have been aware in view of the past
events as to what the Department meant by “connected with S group” could not be accepted.*
*The court referred to Om Shri Jigar Association v. Union of India [1994] 209 ITR 608
(Guj).
Vivad se Vishwas Act, 2020—(i) Condonation of delay in filing an appeal relates back to
the date of filing the appeal for deciding whether an appeal was pending on the specified
date
The assessee’s appeal was pending before the Tribunal with an application for condonation of
delay in filing the appeal when the declaration was filed on the specified date under the 2020
Act in Maheshbhai Shantilal Patel v. Pr. CIT [2021] 439 ITR 112 (Guj). Subsequent to the
specified date, the Tribunal condoned the delay in filing the appeal. The declaration was
rejected on the ground that on the specified date, the delay in filing the appeal was not
condoned by the Tribunal and, hence, no appeal was pending before the Tribunal on the
specified date.
Allowing the assessee’s writ petition, the court held that the Tribunal condoned the delay by a
speaking order on February 23, 2021. The effect of the delay condoned by the appellate
authority was that there was no delay at all in preferring the appeal and the appeal preferred
by the assessee would relate back to the original date of filing of appeal, which would, in
other words, mean that under the 2020 Act, the assessee would fall into the definition of
appellant in whose case the appeal preferred before the Tribunal was pending as on the
specified date, i. e., January 31, 2020. Once an application for condonation of delay in any
matter is preferred and it is allowed, it would be construed as if there was no delay and the
appeal was preferred well within time.
The court also observed that under the circular the query raised in the form of frequently
Asked Question No. 59 was if an appeal had been filed before the specific date, i. e., January
31, 2020, along with an application for condonation of delay, would such assessee be eligible
for availing of the benefits available under the 2020 Act ? The answer to the query makes it
clear that an appeal would be “pending” in the context of section 2(1)(a) of the 2020 Act
when it is first filed till its disposal. Section 2(1)(a) of the 2020 Act does not stipulate that the
appeal should be admitted before the specified date; it only adverts to its pendency. The
appeal would be pending as soon as it is filed and until it is adjudicated upon and a decision
is taken thereon.
For somewhat similar views, see Stride Multitrade Pvt. Ltd. v. Asst. CIT [2021] 439 ITR
141 (Bom)* and Mrs. Premlata Mohan Agarwal v. Pr. CIT [2021] 439 ITR 268 (Bom).
*The court followed Shyam Sunder Sethi v. Pr. CIT [2021] 17 ITR-OL 525 (Delhi).
Vivad se Vishwas Act, 2020—(ii) Disputed interest included in tax arrears
In the 2020 Act there is no provision to exclude interest charged under sections 234A, 234B
and 234C. Section 3 of the 2020 Act provides that where a declarant files under the
provisions of this Act a declaration to the designated authority in accordance with section 4
of the 2020 Act in respect of tax arrears, then notwithstanding anything contained in the 1961
Act or any other law for the time being in force, the amount payable by the declarant under
the 2020 Act, where the tax arrears relate to disputed interest payable under the 1961 Act, on
or before March 31, 2020 will be 25 per cent. of disputed interest and, if paid after April 1,
2020 but before the last date, 30 per cent. of the disputed interest. These were the views
expressed in Mrs. Premlata Mohan Agarwal v. Pr. CIT [2021] 439 ITR 268 (Bom) while
allowing the assessee’s writ petition against rejection of the declaration filed under the 2020
Act on the ground that there was no disputed income as the return filed by the assessee was
accepted in the assessment proceedings. In this case, the assessee had preferred an appeal
against the charging of interest under sections 234A, 234B and 234C, which was pending.
Wealth-tax
Pursuant to a favourable appellate order for an earlier year, refund granted for subsequent
years without having filed appeals for those years
For assessment year 2005-06, the assessee’s appeal was allowed by the Commissioner
(Appeals) and certain assets were held not to be subjected to wealth-tax in Mohandas Isardas
Chatlani v. ITO (International Taxation) [2021] 439 ITR 577 (Bom). Based on this
favourable appellate order, the assessee claimed refund of the wealth-tax paid in the
subsequent years, viz., assessment years 2006-07 to 2009-2010, by writing a letter to the
Assessing Officer, who rejected the claim on the ground that it could not be considered unless
appeals were filed by the assessee before the appellate authority and orders were passed
therein.
Allowing the assessee’s writ petition, the court held that the view of the Assessing Officer
that the cognizance of the appellate order for assessment year 2005-06 could not be
straightaway taken for assessment years 2006-07 to 2009-10 unless appeals were filed by the
assessee before the appellate authority and orders had been passed therein, was unreasonable
and illogical. The Assessing Officer should have first passed the assessment orders for the
years 2006-07 to 2009-10, which orders had not been passed and, therefore, the question of
filing any appeal and obtaining separate order for each year would not arise. In any event, the
commercial premises were the same. Wealth-tax was assessed for assessment year 2005-06
erroneously on the commercial properties and the fact that such an assessment was erroneous
had been confirmed by the appellate authority. Hence, such a stand taken by the Assessing
Officer defied sense. The court directed the Department to refund with interest the tax
amounts already paid by the assessee for those subsequent years.