2020 (11) TMI 118 - HC - Income Tax

High court territorial jurisdiction to entertain the appeal - Income Tax Appellate Tribunal exercises its jurisdiction over more than one state, though it is located in one of those states - Which High Court should have the jurisdiction to rule on the Tribunal's order? - Is it the High Court in whose territorial jurisdiction that Tribunal is located? - HELD THAT - Mere physical location of an inter-state Tribunal cannot be determinative of the High Court's jurisdiction for an aggrieved party to challenge that Tribunal's order. Here, the Assessee is located in Karnataka, so are the Income Tax authorities. The primary order, too, emanated from Karnataka; so was the first appellate order. All challenges, including the appeal before the Tribunal, were in continuation of that primary adjudication or consideration before the Assessment Officer at Belgaum, Karnataka. Therefore, Ambica Industries applies on all fours. This Court has no jurisdiction to entertain this Appeal. As a result, we return the Tax Appeal, to be presented to the jurisdictional High Court if the appellant desires

Issues Involved:
1. Jurisdiction of High Court over the Income Tax Appellate Tribunal's order.
2. Applicability of Ambica Industries precedent.
3. Relevance of the physical location of the Tribunal.
4. Determination of jurisdiction based on the situs of parties or Tribunal.

Detailed Analysis:

1. Jurisdiction of High Court over the Income Tax Appellate Tribunal's order:
The primary issue was to determine which High Court has jurisdiction to rule on an order passed by the Income Tax Appellate Tribunal (ITAT) that exercises jurisdiction over more than one state. The court had to decide whether jurisdiction is based on the High Court where the Tribunal is physically located or the High Court within whose territorial jurisdiction the authority that passed the preliminary order operates.

2. Applicability of Ambica Industries precedent:
The respondent's counsel argued that the jurisdiction should be determined based on whether the Tribunal is multi-state or uni-state, citing the Supreme Court's decision in M/s. Ambica Industries v. Commissioner Of Central Excise (2007) 6 SCC 769. The appellant's counsel argued that this precedent was rendered under different factual circumstances and referred to a Division Bench decision in Principal Commissioner of Income Tax-3 v. Sungard Solutions (I) Pvt. Ltd 2019 SCC OnLine Bom 456.

3. Relevance of the physical location of the Tribunal:
The court examined whether jurisdiction should be based on the physical location of the Tribunal or the situs of the parties involved. The court noted that if jurisdiction is based on the Tribunal's location, it would have jurisdiction, but if based on the parties' location, it would not, as both the Assessee and the Income Tax authority were in Karnataka.

4. Determination of jurisdiction based on the situs of parties or Tribunal:
The court analyzed Ambica Industries, which held that the High Court's jurisdiction should be determined based on where the first court is located, not the Tribunal's physical location. Ambica Industries emphasized that allowing multiple High Courts to have jurisdiction based on the Tribunal's location could lead to judicial anarchy and inconsistency in legal precedents.

Ambica Industries Analysis:
Ambica Industries involved a business assessed in Lucknow, with the tax dispute reaching the Tribunal in New Delhi, which had jurisdiction over multiple states. The Supreme Court ruled that the Delhi High Court did not have jurisdiction, emphasizing that the High Court in the state where the initial assessment was made should have jurisdiction. This decision aimed to avoid judicial inconsistency and ensure that the law applied uniformly within each High Court's territorial jurisdiction.

Sungard Solutions Analysis:
Sungard Solutions dealt with an appeal from the Bangalore Bench of the Tribunal, with the Revenue arguing that the Bombay High Court should have jurisdiction due to the transfer of assessment proceedings to Mumbai. The court held that jurisdiction should be based on the Tribunal's location, but this was limited to cases where the Tribunal did not exercise jurisdiction over more than one state.

Conclusion:
The court concluded that the mere physical location of an inter-state Tribunal cannot determine the High Court's jurisdiction. Following Ambica Industries, the jurisdiction should be based on where the initial assessment and primary adjudication occurred. Since the Assessee and the Income Tax authorities were in Karnataka, and the primary order emanated from Karnataka, the Karnataka High Court had jurisdiction.

Result:
The Bombay High Court held that it had no jurisdiction to entertain the appeal and returned the Tax Appeal to be presented to the jurisdictional High Court if the appellant desired. No order on costs was made.

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