2024 (6) TMI 1296 - HC - Income Tax

Maintainability of the review petition on the basis of a subsequent judgment - condonation of delay of 619 days for Civil Review petition - appellant states that the delay in filing of the present appeal is attributable to the Counsel. The appellant states that being wholly unaware of the judgment and order passed by this Hon'ble Court it could not take necessary steps in the matter Entitlement for Exemption under Section 80-P(2)(a)(i) and Taxability of Transfer Charges Received - whether the Samiti was entitled for exemption u/s 80-P(2)(a)(i) on the interest received by it. and whether the transfer charge received by it is not taxable income - Samiti submits that in Income Tax Officer, Mumbai v. Venkatesh Premises Cooperative Society Ltd. 2018 (3) TMI 675 - SUPREME COURT as laid down the law on the subject and it has been held that the transfer charges payable by the outgoing member does not partake the nature of profit or commerciality as the amount is appropriated only after the transferee is inducted as the member and in view of the law laid down in Venkatesh Premises Cooperative Society Ltd. needs a relook and, accordingly, modified/reviewed. HELD THAT - Explanation to Rule (1) to Order 47 of the Code of Civil Procedure provides that a decision on a question of law on which the judgment of the Court is based if reversed or modified by the subsequent decision of the Superior Court in any other case that shall not form a ground for review of such judgment. The judgment in Venkatesh Premises Cooperative Society Ltd. was rendered on 12th March 2018 but before that 2018 (2) TMI 2117 - JHARKHAND HIGH COURT was dismissed by order. Samiti has brought to our notice a decision in Govt. of NCT of Delhi through the Secretary, Land and building Department and Another v. M/s K. L. Rathi Steels Limited and Others 2023 (3) TMI 1503 - SUPREME COURT to support maintainability of this review petition on the basis of a subsequent judgment. However, the decision in M/s K. L. Rathi Steels Limited is a split verdict of the Hon ble Supreme Court and a final decision thereon is awaited. In the opinion of this Court, if a review petition is entertained ignoring the statutory provisions under Order 47 of the Code of Civil Procedure which are applied in the writ proceedings, that would bring uncertainty and chaos in the system. For the foregoing reasons appeal filed for condonation of delay of 619 days in filing the present Civil Review petition is dismissed.

Summary

Issues:
Condonation of delay in filing Civil Review petition; Entitlement for exemption under section 80-P(2)(a)(i) of the Income Tax Act, 1961; Taxability of transfer charges received; Maintainability of review petition based on subsequent judgment.

Analysis:
The judgment pertains to a Civil Review petition filed to review a previous judgment dated 14th February 2018 in Tax Appeal No. 16 of 2015. The petition sought condonation of a delay of 619 days in filing the review. The petitioner, a Samiti, claimed unawareness of the judgment and cited the need for review based on a subsequent Supreme Court decision regarding transfer charges. The court noted the unusual explanation for the delay, attributing it to the counsel's lack of communication with the petitioner.

In the original case, Tax Appeal No. 16 of 2015 involved a challenge by the Samiti regarding exemption under section 80-P(2)(a)(i) of the Income Tax Act, 1961 on interest received and the taxability of transfer charges. The High Court dismissed the appeal, finding no substantial question of law and imposing costs. The petitioner sought a review based on a Supreme Court decision regarding the nature of transfer charges, arguing for a relook at the original judgment.

The opposing counsel for the Income Tax Department objected to the review petition, citing reasons of unexplained delay, absence of apparent errors in the original order, and the timing of the Supreme Court decision vis-a-vis the Tax Appeal judgment. The court considered the legal provisions under Order 47 of the Code of Civil Procedure, which restrict review based on subsequent superior court decisions to maintain certainty in the legal system.

Ultimately, the court dismissed the application for condonation of delay, emphasizing the need to adhere to statutory provisions and avoid uncertainty in the legal system. Consequently, the Civil Review petition was also dismissed, upholding the original judgment in Tax Appeal No. 16 of 2015.