2013 (10) TMI 225 - HC - Income Tax

Exemption u/s 10 (26AAB) - income of an agricultural produce market committee or board - Business of supply of essential commodities for general public - Held that - petitioner has been granted exemption by the First Appellate Authority. Though the department has preferred an appeal before the Tribunal, yet no order has been passed. Since the appeal of the department is pending adjudication, we are refrained ourselves from making any observations - In Union of India v. Kamlakshi Finance Corpn. Ltd. 1991 (9) TMI 72 - SUPREME COURT OF INDIA it was held that, mere fact that the order of the appellate authority is not acceptable to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court The writ petition is disposed of finally with a direction that the proceedings pertaining to the Assessment Year 2010-11 shall be kept in abeyance, till disposal of appeal filed by the department before the Tribunal. - Decided against assessee.

Summary

Issues:
1. Assessment of total income for the assessment year 2009-10.
2. Exemption under Section 10 (26AAB) of the Income-tax Act.
3. Notice issued under Section 143 (2) for the assessment year 2010-11.
4. Compliance with the order of the First Appellate Authority.
5. Stay of proceedings for the assessment year 2010-11 pending appeal before the Tribunal.

Analysis:

1. For the assessment year 2009-10, the petitioner, a wholly owned Corporation of the Government of Uttar Pradesh, initially declared a total income of Rs. 9,31,55,772/-, which was later revised to Rs. 1,95,657/-. However, the Assessing Officer assessed the total income at Rs. 9,53,22,160/- and directed interest and penalty proceedings. An appeal was filed before the Appellate Authority, which partially allowed the appeal and granted exemption under Section 10 (26AAB) of the Income-tax Act. The department challenged this order before the Tribunal.

2. The petitioner claimed exemption for the assessment year 2010-11 based on the appellate authority's decision. Despite this, a notice under Section 143 (2) was issued. The petitioner argued that since the appellate authority had already allowed the exemption, the Assessing Authority should not proceed further. The petitioner relied on the case of Union of India v. Kamlakshi Finance Corpn. Ltd. AIR 1992 SC 711 to support this argument.

3. The department contended that the Commissioner's order was under challenge before the Tribunal, and until the final decision, the relief granted to the petitioner was not conclusive. The proceedings for the assessment year 2010-11 were to be completed by a specified date. After extensive arguments, both parties agreed to stay the proceedings for the assessment year 2010-11 until the appeal before the Tribunal was resolved.

4. The High Court considered the submissions and noted that the petitioner had been granted exemption by the First Appellate Authority. Despite the department's appeal before the Tribunal, no final decision had been made. Citing the case of Kamlakshi Finance Corpn. Ltd., the Court emphasized the importance of following orders of higher appellate authorities unless suspended by a competent court. Therefore, the Court directed that proceedings for the Assessment Year 2010-11 be kept in abeyance until the appeal before the Tribunal was resolved.