Subbanna Gowramma Family Trust Represented by Its Trustee, Sri. R.S. Devkumar Vs. Commissioner of Income-tax - Court Judgment

SooperKanoon Citationsooperkanoon.com/378227
SubjectDirect Taxation
CourtKarnataka High Court
Decided OnJun-10-2009
Case NumberITA Nos. 1138 and 1139/2008 and Misc. Cvl. Nos. 1408 and 1409/2009
JudgeV. Gopala Gowda and ;Ravi Malimath, JJ.
Reported in[2009]314ITR284(KAR); [2009]314ITR284(Karn)
ActsIncome Tax Act - Sections 161(1A), 164(3) and 260(1)
AppellantSubbanna Gowramma Family Trust Represented by Its Trustee, Sri. R.S. Devkumar
RespondentCommissioner of Income-tax
Appellant AdvocateK.R. Prasad, Adv.
Respondent AdvocateM.V. Seshachala, Adv.
DispositionAppeal disposed of directing the assessing authority to consider the facts pleaded
Excerpt:
- standard weights & measures (packaged commodities) act,1976 [c.a. no. 60/1976]. sections 39 & 83(2)(zd) & standard weights and measures (package and commodities) rules, 1977, rule 6(1)(d); [a.s. bopanna, j] whether rule 6(1)(d) is ultra vires of the act? held, with regard to the validity of rule 6(1)(d) of the rules, a perusal of the rule would indicate that the said rule states that the month and year in which the commodity is manufactured or pre-packed should be borne on every package or on a label securely affixed thereto. the said rule has been framed exercising the power available under section 83 of the act. the specifics of the rule making power relating to the matters provided therein are stated at sub-clause (a) to(zc) and the said sub-clauses does not indicate with regard to the month and year. however, sub-clause (zd) indicates that the rule making power extends to any other matter which requires to be or may be prescribed. even though section 39 of the act does not specifically provide with regard to the month and year but since it is wide enough, the said rule could be framed exercising the power available under sub clause (zd) to sub-section (2) of section 83 of the act. even otherwise, sub-section (2) itself would indicate that the power specified in sub-clauses(a) to (zd) to make rules for carrying out the provisions of the act is without prejudice to the generality of the foregoing power. as such, that any rule framed to achieve the object of the act as a whole cannot be said to be invalid. -- standard weights & measures (packaged commodities) act,1976. sections 39 & 83(2)(zd) & standard weights and measures (package and commodities) rules, 1977, rule 6(1)(d); whether rule 6(1)(d) is ultra vires of the act? held, with regard to the validity of rule 6(1)(d) of the rules, a perusal of the rule would indicate that the said rule states that the month and year in which the commodity is manufactured or pre-packed should be borne on every package or on a label securely affixed thereto. the said rule has been framed exercising the power available under section 83 of the act. the specifics of the rule making power relating to the matters provided therein are stated at sub-clause (a) to(zc) and the said sub-clauses does not indicate with regard to the month and year. however, sub-clause (zd) indicates that the rule making power extends to any other matter which requires to be or may be prescribed. even though section 39 of the act does not specifically provide with regard to the month and year but since it is wide enough, the said rule could be framed exercising the power available under sub clause (zd) to sub-section (2) of section 83 of the act. even otherwise, sub-section (2) itself would indicate that the power specified in sub-clauses(a) to (zd) to make rules for carrying out the provisions of the act is without prejudice to the generality of the foregoing power. as such, that any rule framed to achieve the object of the act as a whole cannot be said to be invalid. - 6. learned counsel appearing for the revenue placing strong reliance upon the observation made at paragraph 7 of the reference cases this court on the questions of low has referred to in the aforesaid itrc cases categorically held as hereunder. 8. learned counsel for the appellant has submitted that the details regarding the last rent received by the appellant trust for the assessment year 1985-86 and 86-87 the particulars would clearly go to show that there is no business income of the appellant trust therefore the provisions of section 161(1a) of the act is not attracted to the fact situation. 9. after considering the rival legal contentions urged by the learned counsel for the parties though this court in itrc cases has answered against the revenue at paragraph 7 above extracted the portion would clearly indicate that the charge of tax is to be in terms of section 161(1a) and explanation 2 below sub-section (3) of section 164 of income tax act.v. gopala gowda, j.1. heard the learned counsel for the parties at the stage of hearing of interlocutory application.2. accepting the reasons stated in the misc.cvl.petitions no. 1408/2009 and 1409/2009 filed in both these appeals delay of 526 days in filing the appeals is condoned. accordingly, misc.cvl. nos. 1408 & 1409/2009 are allowed.3. these two appeals are filed questioning the correctness of the order passed by the income-tax appellate tribunal in income tax appeal no. 1685/bng/1988 and income tax appeal no. 1773/bang/1988 dated 12-3-2007 framing the following question of law:whether on the facts and in the circumstances of the case the tribunal should have held that the provisions of section 161(1a) were inapplicable while giving effect to the earlier order dated 8-11-2006 of the high court of karnataka?.in support of the same urged the grounds and requested this court to answer the said question of law in favour of the assessee by allowing these two appeals.4. the ground of attack of the impugned order passed by the tribunal is that it is bounden duty of the tribunal while giving effect to the order passed under section 260(1) to give due regard to the observations of the high court. it cannot be mechanically followed.5. another ground of attack of the impugned order is that the tribunal should have examined the fact situation and could have ascertained as to whether the provisions of section 161(1a) of the act was applicable or not to the fact situation. in view of the fact that the appellant had no income from business at all and the only income it had was under the head 'house property' arising from a single property giving rise to rent and therefore the provisions of section 161(1a) of the act is not applicable. further she has contended that while answering the points referred for consideration this court in itrc 7 and 8/2001 has answered the following questions of law framed on the reference referred by the assistant registrar of the income tax appellate tribunal, bangalore bench.1. whether on the facts and in the circumstances of the case, the income tax appellate tribunal was correct in law in holding that the assessment for the assessment year 1985-86 should be made in the hands of the beneficiaries and not in the status of aop?2. whether on the facts and in the circumstances of the case, the income tax appellate tribunal was correct in law in holding that the assessment for the assessment year 1986-87 should be made in the hands of the beneficiaries and not in the status of aop?this court in exercise of its power after examining the decision of this court in the case reported in 189 itr 392 in support of the proposition of law held that the assessment should not be made in the status of aop and the assessment must be made only in the hands of the beneficiaries in the case on hand. this court on the basis of the statements of cases drawn by the tribunal both the questions were answered against the revenue holding that both the questions of law referred to above are covered in terms of the judgment of this court referred to supra accordingly this court answered against the revenue and in favour of the assessee as the earlier decision of this court in the above referred cases is binding. having answered the said questions against the revenue, the observations made by this court with regard to charge of tax in terms of section 161(1a) and explanation 2 below sub-section (3) of section 164 of the act was only an observation. therefore, the tribunal was required to hear the appellant assessee before passing the impugned order in relation to the assessment year 1985-86 and 1986-87 respectively. that has not been done in the instant case. therefore, it is urged that the tribunal without application of mind to the foots of the case as to whether the terms of section 161(1a) and explanation 2 below sub-section (3) of section 164 of the act would be applicable to the fact situation or not is not considered by the tribunal therefore the aforesaid question of law framed in these two appeals requires consideration.6. learned counsel appearing for the revenue placing strong reliance upon the observation made at paragraph 7 of the reference cases this court on the questions of low has referred to in the aforesaid itrc cases categorically held as hereunder.we deem ft proper to say that the change of tax is to be in terms of section 161(1a) and explanation 2 below substantial question of sub-section (3) of section 164 of the act.this order was challenged by the asseseee before the apex court by filing special leave petition in s.l.p.(civil) no. 8294/2007. the said order was not interfered with by the apex court vide its order dated 12-12-2007 as the apex court dismissed the special leave petition. learned counsel for the appellant contends that though the special leave petitions are dismissed the facts of the case in relation to the assessment years in question was required to be considered by the tribunal in the appeals. that has not been done in the instant case. therefore the question of law framed by the appellant in both these appeals arise for consideration and answered in favour of the assesaee.8. learned counsel for the appellant has submitted that the details regarding the last rent received by the appellant trust for the assessment year 1985-86 and 86-87 the particulars would clearly go to show that there is no business income of the appellant trust therefore the provisions of section 161(1a) of the act is not attracted to the fact situation. rebutting the above contention, the learned counsel for the revenue submits that since the order passed in the above said case has attained finality as the supreme court dismissed the special leave petition, the question of reconsidering the same by the tribunal would not arise for consideration by this court however, he has made submission that this court may direct the assessing authority to consider the facts of the case for the relevant assessment years giving effect to the assessment orders. submission is placed oh record.9. after considering the rival legal contentions urged by the learned counsel for the parties though this court in itrc cases has answered against the revenue at paragraph 7 above extracted the portion would clearly indicate that the charge of tax is to be in terms of section 161(1a) and explanation 2 below sub-section (3) of section 164 of income tax act. the said order has attained finality as the special leave petition filed by the appellant was dismissed. in this view of the matter though the learned counsel for the appellant contends that the dismissal of the special leave petition does not absolve the tribunal to examine the facts and legal evidence on record and the fact that the appellant trust would earn other income other than the rental income from the single property owned by the trust in this view of the matter it would be suffice for us to direct the assessing authority to consider the facts pleaded in these appeals as to whether the assessee has earned the income only from the house property or any other income other than the house property was earned during the assessment year 1985-86 and 1986-87 at the time of giving effect to the assessment orders. for the aforesaid reasons, we do not feel that the questions of law framed in these appeals would arise for consideration. we answer against the assessee and the other direction issued in this order should be strictly followed and thereafter give effect to the assessment orders for the assessment years in question. we dispose of the appeals with the above observation/direction to the assessment authority.
Judgment:

V. Gopala Gowda, J.

1. Heard the learned Counsel for the parties at the stage of hearing of interlocutory application.

2. Accepting the reasons stated in the Misc.Cvl.petitions No. 1408/2009 and 1409/2009 filed in both these appeals delay of 526 days in filing the appeals is condoned. Accordingly, Misc.Cvl. Nos. 1408 & 1409/2009 are allowed.

3. These two appeals are filed questioning the correctness of the order passed by the Income-tax Appellate Tribunal in Income Tax Appeal No. 1685/BNG/1988 and Income Tax Appeal No. 1773/Bang/1988 dated 12-3-2007 framing the following question of law:

Whether on the facts and in the circumstances of the case the Tribunal should have held that the provisions of Section 161(1A) were inapplicable while giving effect to the earlier order dated 8-11-2006 of the High Court of Karnataka?.

In support of the same urged the grounds and requested this Court to answer the said question of law in favour of the assessee by allowing these two appeals.

4. The ground of attack of the impugned order passed by the Tribunal is that it is bounden duty of the Tribunal while giving effect to the order passed under Section 260(1) to give due regard to the observations of the High Court. It cannot be mechanically followed.

5. Another ground of attack of the impugned order is that the Tribunal should have examined the fact situation and could have ascertained as to whether the provisions of Section 161(1A) of the Act was applicable or not to the fact situation. In view of the fact that the appellant had no income from business at all and the only income it had was under the head 'house property' arising from a single property giving rise to rent and therefore the provisions of Section 161(1A) of the Act is not applicable. Further she has contended that while answering the points referred for consideration this Court in ITRC 7 and 8/2001 has answered the following questions of law framed on the reference referred by the Assistant Registrar of the Income Tax Appellate Tribunal, Bangalore Bench.

1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the assessment for the assessment year 1985-86 should be made in the hands of the beneficiaries and not in the status of AOP?

2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the assessment for the assessment year 1986-87 should be made in the hands of the beneficiaries and not in the status of AOP?

This Court in exercise of its power after examining the decision of this Court in the case reported in 189 ITR 392 in support of the proposition of law held that the assessment should not be made in the status of AOP and the assessment must be made only in the hands of the beneficiaries in the case on hand. This Court on the basis of the statements of cases drawn by the Tribunal both the questions were answered against the revenue holding that both the questions of law referred to above are covered in terms of the judgment of this Court referred to supra Accordingly this Court answered against the revenue and in favour of the assessee as the earlier decision of this Court in the above referred cases is binding. Having answered the said questions against the revenue, the observations made by this Court with regard to charge of tax in terms of Section 161(1A) and explanation 2 below Sub-section (3) of Section 164 of the Act was only an observation. Therefore, the Tribunal was required to hear the appellant assessee before passing the impugned order in relation to the assessment year 1985-86 and 1986-87 respectively. That has not been done in the instant case. Therefore, it is urged that the Tribunal without application of mind to the foots of the case as to whether the terms of Section 161(1A) and explanation 2 below Sub-section (3) of Section 164 of the Act would be applicable to the fact situation or not is not considered by the Tribunal Therefore the aforesaid question of law framed in these two appeals requires consideration.

6. Learned Counsel appearing for the revenue placing strong reliance upon the observation made at paragraph 7 of the reference cases this Court on the questions of low has referred to In the aforesaid ITRC cases categorically held as hereunder.

We deem ft proper to say that the change of tax is to be in terms of Section 161(1A) and Explanation 2 below substantial question of Sub-section (3) of Section 164 of the Act.

This order was challenged by the asseseee before the Apex Court by filing Special Leave Petition in S.L.P.(Civil) No. 8294/2007. The said order was not interfered with by the Apex Court vide its order dated 12-12-2007 as the Apex Court dismissed the Special Leave Petition. Learned Counsel for the appellant contends that though the Special Leave Petitions are dismissed the facts of the case in relation to the assessment years in question was required to be considered by the Tribunal in the appeals. That has not been done in the instant case. Therefore the question of law framed by the appellant in both these appeals arise for consideration and answered in favour of the assesaee.

8. Learned Counsel for the appellant has submitted that the details regarding the last rent received by the appellant Trust for the assessment year 1985-86 and 86-87 the particulars would clearly go to show that there is no business income of the appellant Trust Therefore the provisions of Section 161(1A) of the Act is not attracted to the fact situation. Rebutting the above contention, the learned Counsel for the revenue submits that since the order passed in the above said case has attained finality as the Supreme Court dismissed the Special Leave Petition, the question of reconsidering the same by the Tribunal would not arise for consideration by this Court However, he has made submission that this Court may direct the Assessing Authority to consider the facts of the case for the relevant assessment years giving effect to the assessment orders. Submission is placed oh record.

9. After considering the rival legal contentions urged by the learned Counsel for the parties though this Court in ITRC cases has answered against the revenue at paragraph 7 above extracted the portion would clearly indicate that the charge of tax is to be in terms of Section 161(1A) and explanation 2 below Sub-section (3) of Section 164 of Income Tax Act. The said order has attained finality as the Special Leave Petition filed by the appellant was dismissed. In this view of the matter though the learned Counsel for the appellant contends that the dismissal of the Special Leave Petition does not absolve the Tribunal to examine the facts and legal evidence on record and the fact that the appellant Trust would earn other income other than the rental income from the Single property owned by the Trust In this view of the matter it would be suffice for us to direct the Assessing Authority to consider the facts pleaded in these appeals as to whether the assessee has earned the income only from the house property or any other income other than the house property was earned during the Assessment year 1985-86 and 1986-87 at the time of giving effect to the assessment orders. For the aforesaid reasons, we do not feel that the questions of law framed in these appeals would arise for consideration. We answer against the assessee and the other direction issued in this order should be strictly followed and thereafter give effect to the assessment orders for the assessment years in question. We dispose of the appeals with the above observation/direction to the Assessment Authority.