2014 (4) TMI 853 - HC - Income Tax

Review of the order u/s 260A of the Act - Claim of deduction u/s 80IB(10) of the Act Presence of substantial question of law Held that - All Courts in India are bound to follow the decision of the Supreme Court and the law laid down by the Supreme Court is binding on all Courts and Tribunals - When some principle of law has been laid down by the Supreme Court, it is the duty of the High Court or Subordinate Courts to follow the decision of the Supreme Court and to ignore the well settled law by a judicial pronouncement of the Supreme Court and to pass order contrary to it would be gross impropriety - It amounts to judicial adventurism as has in Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. 1997 (5) TMI 421 - SUPREME COURT . The contention of the assessee that even raising infrastructural development entitled them to deduction u/s 80IB(10) of the Act is not sustainable - assessee have not constructed residential flats and as such barely raising infrastructural facilities would not raise any substantial question of law requiring adjudication by the Court the assessee have sold the plots instead of constructing the residential houses which was essential for the purpose of claiming deduction, was not entitled to deduction - appeal before the High Court is maintainable with respect to any judgment where the High Court is satisfied that the case involves the substantial question of law section 260A(3) of the Act leaves no room for doubt that if the appeal before the HC does not involve any substantial question of law or that High Court is not satisfied that the appeal involves any substantial question of law, then there is no necessity for the High Court to frame substantial question of law and to answer the same thereafter - the entire controversy raised by the assessee was factual in nature and does not contain any legal issue Decided against Assessee.

Summary

Issues Involved:
1. Entitlement to deduction under Section 80IB(10) of the Income Tax Act.
2. Compliance with procedural requirements under Section 260A of the Income Tax Act.
3. Review of the High Court's judgment on the grounds of substantial question of law.

Detailed Analysis:

1. Entitlement to Deduction under Section 80IB(10) of the Income Tax Act:
The petitioner, a Private Limited Company engaged in real estate and construction, filed an e-return for the assessment year 2008-09 declaring NIL income, claiming a deduction of Rs. 13,37,31,420/- under Section 80IB(10). The Assessing Officer denied the deduction on the ground that the petitioner had not constructed residential flats but had only developed infrastructural facilities and sold residential plots. This decision was upheld by the CIT(A) and the Income Tax Appellate Tribunal. The High Court also dismissed the appeal, stating that the petitioner did not meet the conditions required for the deduction under Section 80IB(10), which necessitates the development and construction of residential units.

2. Compliance with Procedural Requirements under Section 260A of the Income Tax Act:
The petitioner contended that the High Court failed to frame and address a substantial question of law before dismissing the appeal. According to Section 260A, an appeal to the High Court is permissible only if it involves a substantial question of law. The petitioner argued that the High Court should have formulated such a question before proceeding. However, the High Court found no substantial question of law in this case, as the petitioner's claim for deduction was based on factual grounds rather than legal issues.

3. Review of the High Court's Judgment on the Grounds of Substantial Question of Law:
The petitioner sought a review of the High Court's judgment, citing precedents where the Supreme Court emphasized the necessity of formulating substantial questions of law in appeals under Section 260A. The petitioner relied on the judgments in M. Janardhana Rao Vs. Joint Commissioner of Income Tax, Commissioner of Income Tax Vs. Ajay Vijay Traders, and Commissioner of Sales Tax, M.P Vs. Hukumchand Mill, Indore. The High Court examined these judgments but concluded that the factual nature of the petitioner's case did not warrant the formulation of a substantial question of law. The Court reiterated that the consistent view of the Assessing Officer, CIT(A), and the Tribunal was that the petitioner did not fulfill the conditions for deduction under Section 80IB(10), as they had not constructed residential units.

Conclusion:
The High Court dismissed the review petition, emphasizing that the appeal did not involve any substantial question of law. The Court also imposed costs of Rs. 50,000/- on the petitioner. The judgment clarified that mere infrastructural development without the construction of residential units does not qualify for deduction under Section 80IB(10). The procedural requirements under Section 260A were deemed satisfied as the Court found no substantial question of law to frame and address.