2017 (2) TMI 1363 - HC - Income Tax

Treatment to entertainment tax subsidy - Tribunal as relying on the decision of Chaphalkar Brothers v/s. 2013 (6) TMI 73 - BOMBAY HIGH COURT in holding that the entertainment tax subsidy is a capital receipt? - Held that - Revenue does not dispute the fact that the issue is covered by the decision of this Court in Chaphalkar Brothers (supra). However this appeal has been filed by the Revenue as the decision of this court in Chaphalkar Brothers (supra) is subject matter of appeal before the Supreme Court. However in the absence of any stay of the decision of this Court in Chaphalkar Brothers (supra) no fault can be found with the impugned order of the Tribunal in following the decision of the jurisdictional High Court. No substantial question of law.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding entertainment tax subsidy as capital receipt.

Analysis:
The High Court considered an appeal challenging the order of the Income Tax Appellate Tribunal pertaining to the Assessment Year 2008-09 under Section 260A of the Income Tax Act, 1961. The main question raised by the Revenue was whether the Tribunal was correct in treating the entertainment tax subsidy as a capital receipt based on a previous decision of the High Court in the case of Chaphalkar Brothers. The Tribunal had relied on this precedent to dismiss the Revenue's appeal. The Revenue acknowledged that the issue was indeed covered by the Chaphalkar Brothers case but highlighted that the decision was under appeal at the Supreme Court. However, since there was no stay on the High Court's decision in Chaphalkar Brothers, the Tribunal's reliance on it was considered valid by the High Court.

The High Court emphasized that the question posed by the Revenue did not present any significant legal issue for consideration. Therefore, the appeal was dismissed, and no costs were awarded. The decision was based on the principle that in the absence of a stay on a relevant court decision, lower authorities are bound to follow it until any contrary decision is made. The High Court's judgment was a clear affirmation of the principle of judicial hierarchy and the binding nature of decisions from higher courts on lower courts and tribunals. The case serves as a reminder of the importance of legal precedent and the hierarchical structure of the judicial system in maintaining consistency and coherence in legal interpretations and applications.