2013 (11) TMI 1448 - HC - Income Tax

Assessee aggrieved - appeal before tribunal - whether a partner can be aggrieved person for an order against the Partnership Firm - Held that - The aggrieved assessee is one who is liable to pay tax in terms of the order against which the appeal is preferred - The CIT (A) has held that the UK firm PONP is taxable in India and the share of profits of the appellant is exempt from income under Section 10(2A) - Once the partnership firm is taxable in India then the appellant s would become liable to pay tax under Section 188A - When an assessment order is passed in respect of the partnership firm, partners would be liable to pay tax not paid by the partnership firm by virtue of the order of CIT(A) - Decided in favour of assessee.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Section 260A for Assessment Year 2003-04; Interpretation of term "assessee aggrieved" under Section 253(1) of the Income Tax Act.

Analysis:
The appellant, a company incorporated in Netherlands, operated ships in partnership with a UK firm. The Assessing Officer held the partnership taxable in India, assessing the appellant to tax. The Commissioner of Income Tax (Appeal) upheld the partnership's tax liability but exempted the appellant's share under Section 10(2A) of the Act. However, DTAA relief was denied. The Tribunal dismissed the appeal, stating the appellant was not an "assessee aggrieved" under Section 253(1) as no tax liability arose from the CIT(A) order. The appellant argued potential tax liability due to the partnership's tax status. The Court found the appellant potentially liable to pay tax under Section 188A once the partnership's tax liability crystallized, making the appellant an aggrieved assessee. The appeal was allowed, quashing the Tribunal's order and directing a merit-based disposal.

In conclusion, the Court's judgment focused on the interpretation of the term "assessee aggrieved" under Section 253(1) of the Income Tax Act. The appellant's potential tax liability as a partner in the taxed partnership was deemed sufficient to establish aggrievement, allowing the appeal to proceed on merits. The decision emphasized the appellant's liability under Section 188A once the partnership's tax liability was determined, ensuring the appellant's right to appeal was not time-barred. The judgment clarified that subsistence of demand was not a prerequisite for being aggrieved, highlighting the importance of examining potential tax liabilities in partnership scenarios.