2014 (2) TMI 948 - SC - Income Tax

Applicability of section 240 - Refund on appeal Block assessment - Whether the HC was correct in holding that Section 240 of the Act is not applicable to Chapter XIV B of the Act and the taxes paid pursuant to the return filed in the block assessment is liable to be refunded to the block assessment proceedings, especially in view of Section 158BH of the Act Held that - The decision in Commissioner of Income-Tax Versus Shelly Products And Another 2003 (5) TMI 4 - SUPREME Court followed - the assessee was only entitled to the refund of tax paid in excess of the tax chargeable on the total income returned by the assessee. - Decided in favour of revenue.

Summary

Issues:
1. Appeal against judgment of High Court of Karnataka in ITA No. 3148 of 2005.
2. Applicability of Section 240 of the Act to Chapter XIV B.
3. Refund of taxes paid in block assessment proceedings.
4. Interpretation of Section 158BH of the Act.
5. Decision based on Commissioner of Income Tax, Bhopal vs. Shelly Products (2003) 5 SCC 461.

Analysis:
1. The Supreme Court granted leave to appeal against the judgment and order of the High Court of Karnataka at Bangalore in ITA No. 3148 of 2005, dated 26.08.2011.
2. The appeal raised a crucial question regarding the applicability of Section 240 of the Act to Chapter XIV B. The Court issued a notice restricted to Question 'C', which focused on whether the taxes paid in block assessment proceedings were liable to be refunded under Section 240 of the Act.
3. The Court referred to a specific case law, Commissioner of Income Tax, Bhopal vs. Shelly Products, (2003) 5 SCC 461, to resolve the issue raised in Question 'C'. It was noted that the question was no longer debatable in light of the decision in the mentioned case.
4. The Court concluded that the interpretation of Section 158BH of the Act was crucial in determining the outcome of the appeal. The judgment favored the Revenue, indicating that the taxes paid pursuant to the return filed in block assessment were not eligible for refund.
5. Several civil appeals were disposed of in the same terms, observations, and directions as the main appeal (Civil Appeal No.1945/2014 @ S.L.P. (C) No. 10482 of 2012), ensuring consistency in the application of the legal principles discussed in the judgment.