Commissioner of Income-tax Vs. Atlas Copco (India) Ltd. - Court Judgment

Excerpt:
- government contracts: [k.g. balakrishnan, c.j. & p. sathasivam & j.m. panchal, jj] allegation as to mala fides held, it would be absurd on the part of the appellants to attribute motives to all by stating that the letter of intent was awarded to respondent 11, s for oblique motives in order to favour respondent 11 arbitrarily. the appellants could not specify either in the petitions filed before the high court or in the memorandum of appeals as to which member of the expert committee or which official of the government of pondicherry or which minister of the council of ministers or which chief minister or lieutenant governor was interested in awarding letter of intent to respondent 11 for oblique motives. on the facts and in the circumstances of the case, the events leading to the award of letter of intent to respondent 11, s do not indicate, in any manner, that the government had acted arbitrarily or that the letter of intent was issued to favour respondent 11 with oblique motives. section 11:res judicata concession made before high court effect - government of pondicherry selecting s as developer for development of pondicherry port on bot basis and entering into concession agreement with s - appellants herein filed writ petition before high court to challenge letter of intent issued to s by government, lieutenant governors approval of detailed project report (dpr) submitted by s as well as the said concession agreement and consequential order passed by director of ports - high court judgment stating that the writ petitioners before it (appellants herein) had conceded before it that they were not assailing the selection of s but were more concerned with possible environmental effect of the project - neither in any application before high court nor in the grounds of slp appellants denying the making of concession nor they alleging that their concession was different and was not correctly recorded by high court held, in such circumstances, the appellants are not entitled to canvass before supreme court that selection of s as developer was not correctly made. section 5 & environment (protection) rules, 1986: contract for development and privatization of pondicherry port - held, contention of the appellants has no substance. no doubt, no one can be permitted to carry no construction activity which is prohibited by the crz. however, the project in question being a project exceeding rs 50 crores necessary environment clearance has to be obtained from moef, government of india. before such consent is granted/obtained, a full environmental impact assessment has to be done. during that exercise, public hearing would be conducted as a matter of rule and all the concerns expressed by the public will have to be taken due note of by the authorities concerned. the specific objections raised by the appellants will also have to be considered and they would be entitled to hearing by the competent authority. mere submission of dpr is not the end of any decision-making process. the implementation of the project as per dpr is solely dependent on the clearance to be given by moef, government of india. the government has every power to stop the project if it violates environmental safeguards. the plea that the environmental clearance must precede the award of the project is wholly misconceived and is incorrect. the application form for obtaining environment clearance under the notification of 2006 makes it very clear that the application has to be made by the entity which has been entrusted with the project. the main objective of the project was the development of pondicherry port. while developing the port, it is necessary to provide certain infrastructural facilities for passengers, shipping crew, port staff and other personnel associated with the port, as part of the port development activity. as and when, the plans are submitted for clearance, the competent authority can always decide upon the desirability of making of constructions which do not fall within the development of the port. the ancillary activities to be undertaken while developing a port cannot be stopped by merely naming them as real estate business. indian ports act, 1908 sections 4(1), 6(1) & 3(9) & (8): minor ports - jurisdiction to undertake development and privatization of pondicherry port - held, vested completely in pondicherry government and not in central government. contention that before awarding contract to any private party for the said purpose pondicherry government ought to have taken prior approval of central government was rejected. reliance placed on section 5, pondicherry (administration) act, 1962 for such contention, held, approval/consent of central government had been obtained further contention that in view of regulation 6(b) of the pondicherry (laws) regulations, 1963, reference to the state government, appearing in section 3(9) of the ports act, 1908 should be construed to be a reference to the central government, also rejected. indian ports act, 1908. sections 4(1), 6(1) & 3(9) & (8): [k.g. balakrishnan, c.j. & p. sathasivam & j.m. panchal, jj] minor ports - jurisdiction to undertake development and privatization of pondicherry port - held, vested completely in pondicherry government and not in central government. contention that before awarding contract to any private party for the said purpose pondicherry government ought to have taken prior approval of central government was rejected. reliance placed on section 5, pondicherry (administration) act, 1962 for such contention, held, approval/consent of central government had been obtained further contention that in view of regulation 6(b) of the pondicherry (laws) regulations, 1963, reference to the state government, appearing in section 3(9) of the ports act, 1908 should be construed to be a reference to the central government, also rejected. - [1990]181itr314(ap) .the same principle should hold good here, says counsel, for the revenue.order1. this appeal is preferred against the judgment of the bombay high ' court dismissing an application filed by the revenue under sub-section (2) of section 18 of the companies (profits) surtax act, 1964. the question raised by the revenue reads as follows :whether, on the facts and in the circumstances of the case, the tribunal was right in cancelling the order of the commissioner passed under section 16(1) of the surtax act, 1964, as without jurisdiction ?.2. the assessment year concerned is 1972-73, the previous year being the calendar year 1971.3. the case of the revenue is this: on the first day of the previous year, the assessee had a certain amount of general reserve. during the said previous year, an amount of rs. 5,53,041 was utilised out of the general reserve for issuing bonus shares. the income-tax officer added the amount representing bonus shares to the, capital base of the company and made an assessment under the act. an appeal was preferred by the assessee against the assessment order on some other points. the appeal was disposed of. at that stage, the commissioner invoked his power under section 16(1) of the act and revised the order of the income-tax officer. he deleted the said amount representing the bonus shares from out of the capital. against this order, the assessee filed an appeal before the income-tax appellate tribunal. the tribunal allowed the appeal holding that inasmuch as the income-tax officer's order was the subject-matter of an appeal before the appellate. assistant commissioner, the commissioner had no jurisdiction to revise that order. the revenue sought to question the said view of the tribunal by obtaining a reference.section 16(1) of the act reads as follows :the commissioner may call for and examine the record of any proceeding under this act, and if he considers that any order passed therein by the income-tax officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.4. the revenue says that this section corresponds to section 263 of the income-tax act, 1961, before it was amended by the finance act, 1988, and the finance act, 1989. even under the unamended section 263, the revenue says, it has been held that where an appeal is preferred by the assessee to the appellate assistant commissioner from an order made by the income-tax officer in respect of only some of the items formed by the income-tax officer's order and the remaining items forming part of the income-tax officer's assessment order were not agitated before the appellate assistant commissioner nor did he pronounce thereupon, the filing of the appeal does not bar the jurisdiction of the commissioner in respect of the items not appealed against and not pronounced upon by the appellate. assistant commissioner. reliance is placed upon a decision of the andhra pradesh high court in cit v. east coast marine products p. ltd. : [1990]181itr314(ap) . the same principle should hold good here, says counsel, for the revenue.5. we are of the opinion that this is an appropriate case where a reference ought to have been directed as prayed for by the revenue. the appeal is accordingly allowed. the tribunal is directed to state the aforesaid, question under section 18(2) of the act for the opinion of the high court. no costs.

Judgment:
ORDER

1. This appeal is preferred against the judgment of the Bombay High ' Court dismissing an application filed by the Revenue under Sub-section (2) of Section 18 of the Companies (Profits) Surtax Act, 1964. The question raised by the Revenue reads as follows :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the order of the Commissioner passed under Section 16(1) of the Surtax Act, 1964, as without jurisdiction ?.

2. The assessment year concerned is 1972-73, the previous year being the calendar year 1971.

3. The case of the Revenue is this: on the first day of the previous year, the assessee had a certain amount of general reserve. During the said previous year, an amount of Rs. 5,53,041 was utilised out of the general reserve for issuing bonus shares. The Income-tax Officer added the amount representing bonus shares to the, capital base of the company and made an assessment under the Act. An appeal was preferred by the assessee against the assessment order on some other points. The appeal was disposed of. At that stage, the Commissioner invoked his power under Section 16(1) of the Act and revised the order of the Income-tax Officer. He deleted the said amount representing the bonus shares from out of the capital. Against this order, the assessee filed an appeal before the Income-tax Appellate Tribunal. The Tribunal allowed the appeal holding that inasmuch as the Income-tax Officer's order was the subject-matter of an appeal before the Appellate. Assistant Commissioner, the Commissioner had no jurisdiction to revise that order. The Revenue sought to question the said view of the Tribunal by obtaining a reference.

Section 16(1) of the Act reads as follows :

The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

4. The Revenue says that this section corresponds to Section 263 of the Income-tax Act, 1961, before it was amended by the Finance Act, 1988, and the Finance Act, 1989. Even under the unamended Section 263, the Revenue says, it has been held that where an appeal is preferred by the assessee to the Appellate Assistant Commissioner from an order made by the Income-tax Officer in respect of only some of the items formed by the Income-tax Officer's order and the remaining items forming part of the Income-tax Officer's assessment order were not agitated before the Appellate Assistant Commissioner nor did he pronounce thereupon, the filing of the appeal does not bar the jurisdiction of the Commissioner in respect of the items not appealed against and not pronounced upon by the Appellate. Assistant Commissioner. Reliance is placed upon a decision of the Andhra Pradesh High Court in CIT v. East Coast Marine Products P. Ltd. : [1990]181ITR314(AP) . The same principle should hold good here, says counsel, for the Revenue.

5. We are of the opinion that this is an appropriate case where a reference ought to have been directed as prayed for by the Revenue. The appeal is accordingly allowed. The Tribunal is directed to state the aforesaid, question under Section 18(2) Of the Act for the opinion of the High Court. No costs.