Commissioner of Income Tax Vs. Dineshchandra S. Shah - Court Judgment

K.A. Puj, J.

1. The CIT has filed this application seeking leave to appeal to the Supreme Court against the judgment rendered on 27th April. 1998. in IT Ref. No. 132 of 1996. The judgment rendered by this Court on 27th April. 1998, is a common judgment in relation to IT Ref. Nos. 54 and 272 of 1993. 121 and 132 of 1996; 15, 19 and 49 of 1997 reported as CIT v. Kiranbhai H. Shelat and Anr. (1998) 147 CTR (Guj) 43--Ed.

2. In the IT Ref. No. 132 of 1996, made at the instance of the Revenue following question of law was referred:

Whether in the facts and circumstances of the case the Tribunal was justified in holding that incentive bonus earned by the assessee as Development Officer of LIC was part of salary within the ambit of Section 17 of the Act and no deductions on account of expenses were permissible?

3. The reference was heard by the Division Bench of this Court on 27th April, 1998 and the question was answered in favour of the assessee and against the Revenue. Though the common judgment was passed by this Court in seven IT references, miscellaneous civil application seeking leave to appeal to Supreme Court is filed by the Revenue only in the present case.

4. Since this was the only application filed by the Revenue, this Court has passed an order on 13th May, 2008 observing therein that in light of the apex Court decision in the case of Union of India and Ors. v. Kaumudini Narayan Dalai and Anr. : [2001]249ITR219(SC) , the applicant Revenue is required to establish that all assessees have been treated alike and it is not open to the Revenue to accept the Judgment in the case of one or the other assessee and challenge the correctness of the Judgment in the case of other assessees without just cause. The learned standing counsel Shri M.R. Bhatt stated that the judgment in the case of other assessees may not have been challenged due to low tax effect. The Court has also recorded submissions of the learned Counsel appearing for the assessee that even in the case of the respondent assessee the tax effect is low. The Court, therefore, directed the applicant Revenue to place on record the tax effect in case of each assessee for each of the references decided under the common judgment.

5. Pursuant to the said order an affidavit is filed by Mr. J.L. Bhatia, ITO. Ward 15(2), Ahmedabad, stating that the matters being too old the relevant records are not available. His office has made efforts to trace out the connected records with the office of the High Court Cell of the office of the Chief CIT, Ahmedabad, as also with the office of CIT-VII, Ahmedabad, but the relevant records are not traceable. It is, therefore, stated that his office is unable to communicate the comparative tax effect. Since the records are not traceable, he was not in a position to state as to whether SLP/MCA was filed in the connected cases.

6. Mr. Manish Bhatt, learned standing counsel, therefore, submitted that since the record is not available it cannot be presumed that the applicant Revenue has not filed either MCA or SLP in other matters in which common judgment is rendered by this Court on 27th April, 1998. He has further submitted that in view of the provisions of Section 268A inserted by the Finance Act, 2008 with retrospective effect from 1st April, 1999 the applicant Revenue should not be precluded from filing an application or reference on the same issue in the case of the same assessee for any other assessment year or any other assessee for the same or any other assessment year.

7. Mr. Bhatt has further submitted that there is no dispute about the fact that substantial question of law does arise which requires certificate of fitness by this Court. In support of his submission he relied on six judgments delivered by different High Courts wherein contrary view is taken by those High Courts. These cases are as under:

(1) B.M. Parmar, Development Officer of LIC v. CIT ;

(2) CIT v. P. Arangaswamy and Ors. : [2000]242ITR563(Mad) ;

(3) CIT v. M.D. Patil : [1998]229ITR71(KAR) :

(4) CIT v. E.A. Rqjendran : [1999]235ITR514(Mad) ;

(5) CIT v. B. Chinnaiah and Ors. : [1995]214ITR368(AP) ;

(6) CIT v. Sri Anil Singh (1995) 215 ITR 224.

He has, therefore, submitted that the matter is required to be considered by the apex Court and hence certificate of fitness should be granted by this Court.

8. Mr. S.N. Divatia, learned Counsel appearing for the respondent on the other hand has submitted that the common Judgment has been rendered by this Court in six different cases and only in the case of the present assessee, MCA is filed by the applicant Revenue seeking leave to appeal to the Supreme Court. He has therefore submitted that the assessee has been singled out. He has placed reliance on the decision of the Supreme Court in the case of Union of India and Ors. v. Kaumudini Narayan Dalal and Anr. (supra). He has further relied on the decision of the Supreme Court in the case of Asstt. CIT v. Surat City Gymkhana (2008) 216 CTR (SC) 23 : (2008) 300 ITR 214 wherein while dismissing the appeal filed by the Revenue the Hon'ble Supreme Court held that the questions raised in the appeals are covered by the decision of the Gujarat High Court in the case of Hiralal Bhagwati v. CIT : [2000]246ITR188(Guj) and the Revenue did not challenge the correctness of the said judgment before the Supreme Court.

9. Mr. Divatia has further submitted that even as per the provision contained in Section 268A of the Act, the applicant's case is covered by Sub-section (1). Section 268A(1) says that the Board may, from time to time, issue orders, instructions or directions to other IT authorities, fixing such monetary limits as it may deem fit, for the purpose of regulating filing of appeal or application for reference by any IT authority under the provisions of this chapter. So far as present assessee's case is concerned, tax effect in each of the three years is very low and is below the monetary limit prescribed by the Board and in this view of the matter apart from the fact whether MCA/SLP is filed by the Revenue in any other case, as per the Board's instructions no MCA could have been filed in assessee's case, looking to the tax effect being very low.

10. Considering the rival submissions of the parties and considering the authorities relied upon by the learned Counsel appearing for the respective parties, we are of the view that even if it is assumed that substantial question of law may arise, looking to the facts of this particular case and considering that low tax effect Involved and further considering the Board's 'instructions' for the purpose of filing appeal or application, we do not think it just and proper to grant certificate of fitness in the present case. Section 268A of the Act does not render any assistance to the Revenue in the present case.

11. Accordingly, the application for leave to appeal filed by the Revenue deserves to be rejected. It is accordingly rejected.