2008 (12) TMI 673 - HC - Income Tax

Whether the Tribunal has acted perversely and illegally by not reversing the action of the Assessing Officer and the Commissioner of Income-tax (Appeals) in treating the advance rent as the cost of acquisition of tenancy rights and by remanding the matter back to the file of the Assessing Officer when the issue arising for its determination was squarely covered by the decision rendered by the hon ble Supreme Court in the case of CIT v. D. P. Sandu Bros. Chembur P. Ltd. 2005 (1) TMI 13 - SUPREME Court ? Whether on the facts and in the circumstances of the case the Tribunal misdirected itself in law as well on facts in remanding the case to the Assessing Officer in the case of the appellant for the assessment year 1994-95 for the recalculation of capital gains tax when the cost of acquisition of tenancy rights was not ascertainable? Whether the impugned order passed by the Tribunal remanding back the case to the Assessing officer for de novo adjudication fulfils the requirements of a speaking order? Held that - The contention of learned senior counsel for the appellant to be totally misconceived. In the present case the judgment has been referred to in the order passed by the Tribunal. Even though the Tribunal may not have discussed the same in detail in the impugned order however still in terms of the provisions of article 141 of the Constitution of India the law laid down by the hon ble Supreme Court is binding on all the courts/ authorities subordinate to it and no court or authority is expected to overlook the same even if no judgment is cited in the order remanding the case to a lower authority. In the present case the judgment is referred to in the impugned order. There may even be a case where a judgment on the issue may be delivered subsequent to the remand of the case even that would be binding on the lower authority. Still further the matter has only been remanded back to the Assessing Officer for fresh determination with liberty to the assessee to lead any further evidence if requires. The issue has not been finally determined. In case still the issue is determined against the assessee it have its remedies in accordance with law. No substantial question of law arises in the present appeal.

Summary

Issues:
1. Whether the Tribunal acted perversely and illegally by not reversing the action of the Assessing Officer and the Commissioner of Income-tax in treating the advance rent as the cost of acquisition of tenancy rights?
2. Whether the Tribunal misdirected itself in law by remanding the case to the Assessing Officer for the recalculation of capital gains tax when the cost of acquisition of tenancy rights was not ascertainable?
3. Whether the impugned order passed by the Tribunal remanding the case fulfills the requirements of a speaking order?

Analysis:

Issue 1: The appellant contested the treatment of advance rent as the cost of acquisition of tenancy rights. The assessee had received a substantial amount on transferring tenancy rights to a bank and claimed exemption from taxation. The Assessing Officer considered the lump sum payment for acquiring tenancy rights as the consideration for the asset and thus, taxable under capital gains. The Commissioner of Income-tax (Appeals) upheld this view, leading to an appeal before the Tribunal. The Tribunal remanded the case to the Assessing Officer for further adjudication, allowing the assessee to produce additional evidence. The senior counsel for the appellant argued that the Tribunal should have accepted the appeal based on the Supreme Court's judgment in a similar case. However, the court found this argument misconceived, emphasizing that the Tribunal's order referred to the Supreme Court's judgment, which binds all lower authorities. The matter was remanded for fresh determination, and the court dismissed the appeal, stating no substantial question of law arose.

Issue 2: The second issue revolved around the misdirection of the Tribunal in remanding the case for recalculation of capital gains tax when the cost of acquiring tenancy rights was deemed indeterminable. The appellant's counsel argued that the Tribunal should have accepted the appeal based on the Supreme Court's precedent. The court, however, clarified that the Tribunal's decision to remand the case did not violate the law laid down by the Supreme Court. The Tribunal's order referred to the relevant judgment, and the matter was sent back to the Assessing Officer for fresh determination, allowing the appellant to present further evidence if needed. The court cited a case where a reference could not be made if the Tribunal merely remands the matter without deciding any issue. Ultimately, the court dismissed the appeal, finding no substantial question of law.

Issue 3: The final issue concerned whether the impugned order passed by the Tribunal remanding the case fulfilled the requirements of a speaking order. The court examined the Tribunal's decision to remand the case and found that it was in line with the law. The Tribunal had referred to the Supreme Court's judgment in its order, and the matter was sent back to the Assessing Officer for fresh determination, with the appellant having the opportunity to present additional evidence. The court dismissed the appeal, stating that no substantial question of law arose in the case.

In conclusion, the High Court dismissed the appeal, finding no substantial question of law in the issues raised regarding the treatment of advance rent as the cost of acquisition of tenancy rights and the Tribunal's decision to remand the case for further adjudication. The court emphasized the binding nature of Supreme Court judgments on lower authorities and upheld the Tribunal's decision to refer the matter back to the Assessing Officer for fresh determination.