2020 (2) TMI 618 - HC - Income Tax

Settlement of inter/intra government disputes - Mandation of obtaining COD (Committee on Disputes) approval - ITAT dismissed the revenue appeal - Whether Tribunal is justified in dismissing the appeal in limine on the ground that approval from High Powered Coordination Committee has not been taken when a question of law was posed by the revenue to the effect that Section 192 of the statute clearly postulates that a person responsible for paying income chargeable under the head 'Salaries' shall at the time of payment deduct income tax on the amount payable at the average of income tax computed on the basis of the rates enforced for the financial year in which the payment is made on the estimated income of the assessee ? 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 of Income Tax Appellate Tribunal dismissing appeals filed by Revenue without COD approval.

Analysis:
1. The appeal was filed by Revenue challenging the order of the Income Tax Appellate Tribunal dismissing all appeals filed by the appellant- Revenue without obtaining COD (Committee on Disputes) approval. The Tribunal cited the judgment in ONGC vs. CCE (1992) Supp (2) SCC 432 to support its decision, stating that approval from COD was necessary in disputes between a public sector undertaking and a Government Department. The Revenue contended that COD approval was not required for the respondent-assessee, a DDO responsible for payments, and that the Tribunal erred in not considering the provisions of Section 192 of the Income Tax Act, which mandates tax deduction on salaries. The Revenue argued that COD approval was only necessary for disputes between Government Departments and PSUs.

2. The appellant- Revenue pointed out that the Supreme Court in Electronics Corporation of India Limited vs. Union of India and others (2011) 3 SCC 404 had overturned its earlier decision in ONGC's case. The respondent did not dispute this argument but contended that since the appeal was admitted in 2006 when ONGC's case was valid, the Electronics Corporation judgment should not apply. The Court noted the Supreme Court's decision in Electronics Corporation, which clarified that COD approval was not required as previously mandated.

3. The Court observed that the Constitution Bench of the Supreme Court in Electronics Corporation had recalled its earlier decision in ONGC's case and concluded that COD approval was not necessary. The Court highlighted the evolution of the dispute resolution mechanism through various judgments and emphasized that the COD approval requirement had outlived its utility. Consequently, the Court allowed the appeal, set aside the Tribunal's order, and remanded the matter for re-decision on merits in accordance with the law.

4. The judgment clarified that following the Supreme Court's decision in Electronics Corporation, the requirement of COD approval for filing appeals was no longer valid. The Court emphasized that the substantial question of law framed was answered accordingly, and the Tribunal's decision to dismiss the appeals solely based on the lack of COD approval was deemed unsustainable. The Court allowed the appeal, overturned the Tribunal's order, and directed a re-decision of the appeals on their merits in compliance with the law.