2012 (6) TMI 684 - HC - Income Tax

Whether appeal of Revenue should be admitted and await the outcome of the decision of the Supreme Court in respect of similar question, when the question has been decided against Revenue by High Court - question regarding deduction u/s 10A without setting off the carried forward business loss and depreciation - Held that - Supreme Court has not laid down or settled the law in this regard. Though some times this Court may await the decision of the Supreme in a pending appeal before it, if the same question is involved in matter pending before the High Court, in the instant case we do not see any justification or reason to await the decision of the Supreme Court, as in the special leave petition only notice is ordered and the appeal is yet to be admitted. Impugned question decided against Revenue. Appeal dismissed.

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal regarding deduction under Section 10A without setting off carried forward business loss and depreciation for assessment year 2005-06.

Analysis:
The appeal before the Karnataka High Court was brought by the Revenue challenging the order of the Income Tax Appellate Tribunal 'A' Bench, Bangalore, pertaining to the calculation of deduction under Section 10A without setting off the carried forward business loss and depreciation for the assessment year 2005-06. The key question raised was whether the ITAT was justified in law in directing the Assessing Officer to calculate the deduction under Section 10A without considering the set off of carried forward losses and depreciation.

In the submission made by the learned Counsel for the appellant-Revenue, it was argued that the Tribunal's decision was based on a previous ruling of the High Court, which allowed the deduction under Section 10A without setting off the carried forward business loss and depreciation. Reference was made to the case of CIT vs M/s Axa Business Services Pvt. Ltd. & Others, where a similar decision was rendered. Despite acknowledging that the question may have to be answered against the Revenue if the earlier decision is followed, it was contended that the matter was pending before the Supreme Court through a special leave petition, and therefore, the appeal should be admitted to await the outcome of the Supreme Court decision on a similar issue.

The High Court, however, noted that the Supreme Court had not yet provided a definitive ruling on this matter. While it is common for the High Court to await the Supreme Court's decision in a pending appeal, the Court found no compelling reason to delay its decision in this instance. The Court highlighted that in the special leave petition before the Supreme Court, only a notice had been issued, and the appeal was yet to be admitted. Consequently, the High Court decided to follow its previous decision and answered the question against the Revenue, ultimately dismissing the appeal.

In conclusion, the Karnataka High Court upheld the decision of the Income Tax Appellate Tribunal and dismissed the appeal by the Revenue, emphasizing the lack of a definitive Supreme Court ruling and the absence of sufficient grounds to delay the judgment based on the pending special leave petition.