2013 (6) TMI 797 - AT - Income Tax

Deduction under Section 80-IA(4) denied - validity of ex-parte order passed by tribunal - Held that - As per Rule 25 of Appellate Tribunal Rules 1963 when on the date of hearing the appellant appears and respondent does not appear the Tribunal can dispose of the appeal on merits after hearing the appellant. Proviso to the said rule also states that if the respondent satisfies the Tribunal that there was sufficient cause for non-appearance then the Tribunal shall make an order setting aside the ex parte order. However in our opinion this rule cannot be interpreted to mean that in every case where decision has been reached by the Tribunal on merits and no glaring or apparent mistake whatsoever is shown therein it is still to be recalled. Tribunal had taken a view that assessee was not eligible for a deduction under Section 80-IA after taking into account all the aspects relating to the case. Assessee admittedly was only a partnership and not a limited company. As per the Revenue assessee was only executing civil work for different organizations on contract basis. Considering these aspects the Tribunal came to a conclusion that assessee being not a company registered in India it could not avail of the deduction under Section 80-IA(4) of the Act. Tribunal also came to correct factual finding that nothing was on record to show that the agreement entered by the assessee with Central Government State Government Local Authority or any statutory body were for developing any infrastructural facilities. Argument of the learned A.R. that partnership firm was a body established or constituted under a Centre or State Act cannot be accepted for the simple reason that had it been so the Legislature would not have made specific limitation by virtue of the above clause whereby only companies and corporate bodies of similar nature have been made eligible for claiming such deduction. - Decided against assessee.

Summary

Issues:
1. Recall of an ex parte order due to non-appearance of counsel.
2. Eligibility of a partnership firm for deduction under Section 80-IA.
3. Interpretation of Rule 25 of Appellate Tribunal Rules, 1963 regarding recalling orders.

Recall of Ex Parte Order:
The petitioner sought the recall of an order passed ex parte by the Tribunal due to the non-appearance of their counsel, citing the counsel's late arrival caused by undergoing physiotherapy. The petitioner argued that the Tribunal's order should be recalled as per Rule 25 of the Appellate Tribunal Rules, 1963, which requires the respondent to satisfy the Tribunal on the cause of their non-appearance. The petitioner contended that the Tribunal's failure to consider sub-clause (a) of clause (i) of sub-section (4) of Section 80-IA led to an incorrect decision regarding the petitioner's eligibility for a deduction under this section.

Eligibility for Deduction under Section 80-IA:
The Tribunal deliberated on the petitioner's eligibility for claiming a deduction under Section 80-IA(4) of the Income-tax Act, 1961. It was established that the petitioner, a partnership firm, was not a company registered in India and was engaged in civil work on a contract basis. The Tribunal concluded that the petitioner did not qualify for the deduction under Section 80-IA(4) as it was not a company or corporate body as specified in the relevant clause. The Tribunal also noted that the agreements entered into by the petitioner did not involve the development of infrastructural facilities, further supporting the denial of the deduction.

Interpretation of Rule 25 of Appellate Tribunal Rules, 1963:
The Tribunal analyzed Rule 25 of the Appellate Tribunal Rules, 1963, which addresses the disposal of appeals when one party is absent. The rule allows for the setting aside of an ex parte order if the absent party demonstrates sufficient cause for non-appearance. The Tribunal emphasized that this rule does not grant an automatic right to recall an order merely due to non-appearance, especially when the decision was reached on merits and no substantial mistake is evident. The Tribunal highlighted that the purpose of such rules is to ensure expeditious justice and not to aid negligent parties or their counsels who fail to appear despite receiving notices. In this case, the Tribunal found no reasonable cause for the petitioner's non-appearance and dismissed the Miscellaneous Petition seeking a review of the order passed on merits.

In conclusion, the Tribunal dismissed the Miscellaneous Petition filed by the assessee, emphasizing that the rules should not be misused to circumvent the justice process when a reasoned decision has been made. The judgment underscores the importance of adherence to procedural rules and the substantive criteria for claiming deductions under the Income-tax Act, maintaining the integrity of the legal process.