2015 (5) TMI 309 - HC - Income Tax

Remand for re decision - disallowance u/s 40(a)(ia)Special Bench decision of the Tribunal in Merilyn Shipping & Transports 2012 (4) TMI 290 - ITAT VISAKHAPATNAM on the issue though the appeal against the same is pending adjudication before the hon'ble court - Held that - Until and unless the decision of the Special Bench is upset by this court, it binds smaller Bench and co-ordinate Bench of the Tribunal. Under the circumstances, it is not open to the Tribunal, as rightly contended by Mr. Narasimha Sarma, learned counsel, to remand on the ground of pendency on the same issue before this court, overlooking and overruling, by necessary implication, the decision of the Special Bench. We simply say that it is not permissible under quasi-judicial discipline. Under the circumstances, we set aside the impugned judgment and order, and restore the matter to the file of the Tribunal which will decide the issue in accordance with law and it would be open to the Tribunal either to follow the Special Bench decision or not to follow. If the Special Bench decision is not followed, obviously remedy lies elsewhere. - Decided in favour of assessee for statistical purposes.

Summary

Issues:

1. Justification of the Tribunal's decision to pass an order of remand despite the pendency of an appeal before the court against the Special Bench decision.

Analysis:

The High Court admitted the appeal for statistical purposes based on the substantial question of law regarding the Tribunal's decision to remand the case. The Court noted that the Tribunal directed the Assessing Officer to redecide the issue considering the pendency of an appeal by the Revenue against the Special Bench decision. The High Court emphasized that the decision of the Special Bench binds smaller and co-ordinate Benches of the Tribunal until overturned by the court. The Court highlighted that it is not permissible under quasi-judicial discipline for the Tribunal to remand a case based on the pendency of an appeal before the court, thereby setting aside the impugned judgment and restoring the matter to the Tribunal for a fresh decision in accordance with the law. The Tribunal was instructed to decide the issue within two months from the date of the order, with the option to follow or not follow the Special Bench decision, stating that if not followed, the remedy lies elsewhere.

Overall, the High Court allowed the appeal solely on the point of remand, emphasizing the importance of adhering to legal precedents and quasi-judicial discipline. The Court's decision aimed to ensure a fair and lawful resolution of the issue at hand, providing clear instructions to the Tribunal for a timely reevaluation of the matter.