2019 (12) TMI 1080 - HC - Income Tax

Permission by ITAT to raise additional grounds - HELD THAT - All that the Tribunal has done is to permit the respondent to raise the additional ground. The same does not tantamount to acceptance of the additional ground on its merits. The petitioner would have the right to assail the interlocutory order, whereby additional ground has been admitted as well as the finding that the Tribunal may return on the said additional ground, in case the petitioner is aggrieved by the final order that the Tribunal may pass in the pending appeal while preferring an appeal under Section 268 of the Income Tax Act. We are, therefore, not inclined to entertain the present writ petition to assail the impugned order. We dispose of the writ petition while directing the Tribunal to advert to the written submissions filed by the petitioner at the time of final adjudication of the pending appeal, including additional ground permitted to be raised before it.

Summary

Issues:
Challenge to the interim order of the Income Tax Appellate Tribunal (ITAT) allowing the respondent assessee to raise additional grounds regarding the levy of dividend distribution tax as per the double taxation avoidance agreement (DTAA) between India and Japan.

Analysis:
The High Court addressed the challenge to the interim order passed by the ITAT, which allowed the respondent assessee to raise additional grounds related to the levy of dividend distribution tax. The respondent sought to limit the tax levy to 10% in accordance with the DTAA between India and Japan, rather than the 16.60875% charged under section 115-O of the Income Tax Act. The petitioner contended that this issue was never raised before the Assessing Officer and should not have been allowed as the respondent is a resident Indian company, not the recipient of the dividend. However, the Court noted that the ITAT's order merely permitted the raising of additional grounds and did not determine the merits of the issue.

The Court emphasized that the impugned order was interlocutory and did not decide the rights of the parties on the merits. It clarified that allowing the respondent to raise additional grounds did not imply acceptance of those grounds. The petitioner was granted the right to challenge the final order that the ITAT might pass in the pending appeal under Section 268 of the Income Tax Act. Consequently, the Court declined to entertain the writ petition challenging the ITAT's order.

In conclusion, the High Court disposed of the writ petition and directed the ITAT to consider the written submissions filed by the petitioner during the final adjudication of the pending appeal, including the additional ground permitted to be raised. The Court's decision maintained the distinction between an interlocutory order allowing the raising of additional grounds and a final determination on the merits of the case, ensuring the petitioner's right to challenge the final order in due course.