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2017 (8) TMI 293 - HC - Income TaxDeduction under section 80IB(9) - eligible undertaking - effect of the Explanation contained in sub section (9) of section 80IB - Held that - Both sides agreed that the applicability of the explanation below sub-section (9) of section 80IB of the Act is not involved in the tax appeals pending before the Tribunal. However, both sides also agreed that the implication of the clause (iv) of sub-section (9) is one of the important issues involved in large number of such appeals. We have, therefore, proceeded on such basis. In that context, if we peruse the interim order of the Supreme Court, it provides that since the Supreme Court is entertaining the matter, the High Court wherever such appeals are pending, would not finalize the same till the matter is dealt with by the Supreme Court. The intention of the Supreme Court is thus, amply clear and it precludes any High Court from deciding the issues which are presented in the appeal against the judgement of the High Court in case of Niko Resources Ltd. (2015 (3) TMI 986 - GUJARAT HIGH COURT). Such issue could be one of implication of the Explanation to subsection (9) of section 80IB or of the interpretation of clause (iv) thereof. In either case, it would not be open for the High Court to proceed further and finalize the issue till the Supreme Court decides the appeal. Effectively therefore, the Supreme Court not only stayed the operation of the judgement of the High Court but has stayed judgement itself. We are conscious that the order of the Supreme Court does not take within its fold any pending appeal before the Tribunal. Strictly speaking therefore counsel for the petitioner may be correct in contending that there is no stay against the Tribunal proceeding further in such tax appeals. However, in the present case, it is not the question of the legality of power on part of the Tribunal, but propriety in proceeding or not proceeding with the appeals. When admittedly one of the issues involved in such tax appeals is of the effect of clause (iv) of newly substituted subsection (9) of section 80IB of the Act and consequently, the ratio laid down by the High Court in case of Niko Resources Ltd. (supra), the Tribunal cannot be faulted for deciding not to proceed further with the bunch of appeals till the Supreme Court finally cleared the issues. We see no impropriety or legal error in the Tribunal choosing this option.
Issues Involved:
1. Validity of the Tribunal's decision to adjourn appeals sine die. 2. Applicability of Section 80IB(9) of the Income Tax Act, 1961. 3. Impact of the Supreme Court's interim order on pending appeals. Detailed Analysis: 1. Validity of the Tribunal's Decision to Adjourn Appeals Sine Die: The petitioner, an assessee, challenged the Income Tax Appellate Tribunal's order dated 17.01.2017, which adjourned a group of 32 appeals and cross-appeals sine die. The petitioner argued that the Tribunal should expedite the disposal of these appeals, especially since they had been granted conditional stay upon depositing a certain percentage of disputed tax dues. The Tribunal's decision was based on the Supreme Court's interim order dated 20.11.2015, which directed that High Courts should not finalize appeals involving issues similar to those in the Niko Resources Ltd. case until the Supreme Court adjudicated the matter. 2. Applicability of Section 80IB(9) of the Income Tax Act, 1961: The core issue revolved around the deduction claims under Section 80IB(9) of the Income Tax Act, 1961. This section grants a deduction to undertakings engaged in commercial production of mineral oil for seven consecutive assessment years. The Finance (No.2) Act of 2009 substituted sub-section (9) with retrospective effect from 01.04.2000, introducing significant changes, including an explanation that all blocks licensed under a single contract should be treated as a single "undertaking." The petitioner contended that the Tribunal's adjournment was erroneous as the interim order from the Supreme Court did not preclude Tribunals from entertaining tax appeals, even if such appeals involved questions related to Section 80IB(9). 3. Impact of the Supreme Court's Interim Order on Pending Appeals: The Supreme Court's interim order dated 20.11.2015 stated, "As we are entertaining the matter, the High Court(s) where the appeals are pending shall not finalize the same till the matter is dealt with by this Court." The Revenue argued that this order necessitated the adjournment of the appeals sine die, as the issues in the pending appeals were similar to those decided in the Niko Resources Ltd. case. The Tribunal agreed, reasoning that proceeding with the appeals could lead to further litigation and merely shift the dispute from the Tribunal to the High Court. The Tribunal's decision to adjourn the appeals sine die was based on the potential for further litigation and the Supreme Court's directive to halt finalization of similar issues. Conclusion: The High Court upheld the Tribunal's decision to adjourn the appeals sine die, emphasizing that the Tribunal's choice was appropriate given the Supreme Court's interim order. However, the High Court noted that if there were appeals within the group that did not involve the deduction under Section 80IB(9), the Tribunal should segregate and decide those appeals separately. The petition was disposed of with these observations.
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