2020 (2) TMI 573 - HC - Income Tax

Settlement of inter/intra government disputes - Mandation of obtaining COD (Committee on Disputes) approval - ITAT dismissed the revenue appeal - Whether COD s approval is mandatory in cases where assessee is not P.S.U. but D.D.Os who are disbursing the payments to the employees and contractors are forced to deduct tax as per provisions of Chapter XVII-B of the Act? - HELD THAT - Undoubtedly, the Constitution Bench of the Supreme Court in Electronics Corporation 2011 (2) TMI 3 - SUPREME COURT reversed its earlier decision in ONGC s case 1991 (10) TMI 58 - SUPREME COURT and held that approval of the COD in terms of its earlier judgment was not required. Since the Supreme Court in Electronics Corporation (supra) has recalled its all earlier judgments whereby following the decision in ONGC s case (supra) direction was issued to resort to mechanism of settlement of inter/intra government disputes by referring matter to Committee on disputes and the said committee was set up, therefore, the judgment in ONGC s case (supra) no longer holds the field and it would be deemed that there was no requirement of COD approval for filing the appeal. The substantial question of law framed is thus, answered accordingly. I mpugned order passed by the Tribunal dismissing the appeals only on the ground that there was no sanction from the COD, is unsustainable and is hereby set aside. The matter is remanded to the learned Tribunal to re-decide the appeals on merits in accordance with law.

Summary

Issues:
Challenge to order passed by Income Tax Appellate Tribunal | Requirement of COD's approval for appeals | Interpretation of Supreme Court judgments on COD approval

Analysis:
The High Court of Madhya Pradesh heard an appeal by the Revenue challenging an order by the Income Tax Appellate Tribunal. The issue revolved around the necessity of Committee on Disputes (COD) approval for appeals when the assessee is not a Public Sector Undertaking (PSU) but a Disbursing and Drawing Officer (DDO). The Tribunal had dismissed the appeals as COD approval was not obtained, citing the ONGC case where Supreme Court mandated COD approval for PSU disputes. The appellant argued that COD approval was unnecessary for non-PSU cases, referencing the Electronics Corporation case where the Supreme Court overturned the ONGC judgment. The respondent did not contest this argument but claimed that the appeal was admitted when the ONGC judgment was valid. However, the High Court noted the reversal of the ONGC decision in the Electronics Corporation case and allowed the appeal.

The High Court acknowledged the Supreme Court's reversal of the ONGC judgment, emphasizing that COD approval was not required as per the Electronics Corporation case. The Court highlighted the evolution of the dispute resolution mechanism through various Supreme Court orders, ultimately concluding that the COD approval mandate had outlived its utility. Consequently, the High Court ruled that the earlier requirement of COD approval, based on the ONGC judgment, was no longer valid. The judgment in the present case was set aside, and the matter was remanded to the Tribunal for a fresh decision on merits without considering the COD approval aspect.

In conclusion, the High Court allowed the appeal, emphasizing that the Tribunal's dismissal solely based on the lack of COD approval was unsustainable. The Court directed the Tribunal to reconsider the appeals on their merits in accordance with the law, as the requirement of COD approval for filing the appeal was deemed unnecessary based on the Supreme Court's updated stance in the Electronics Corporation case.