ASSOCIATION OF CORPORATION & APEX SOCIETIES OF HAN Vs. ASSISTANT DIRECTOR OF INCOME TAX
January, 29th 2013
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 10.01.2013
+ ITA 523/2012
+ ITA 524/2012
+ ITA 525/2012
+ ITA 526/2012
ASSOCIATION OF CORPORATION &
APEX SOCIETIES OF HANDLOOMS ..... Appellant
ASSISTANT DIRECTOR OF INCOME TAX ..... Respondent
Advocates who appeared in this case:
For the Appellant : Mr Rajat Navet and Mr Kushagra Pandit, Advs.
For the Respondent : Mr Sanjeev Sabharwal, sr. standing counsel with Mr
Puneet Gupta, jr. standing counsel with Ms Gayatri
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
BADAR DURREZ AHMED, J (ORAL)
CM 15411/2012 in ITA No.524/2012
CM 15423/2012 in ITA No.525/2012
CM 15434/2012 in ITA No.526/2012
Exemption is allowed subject to all just exceptions.
The applications are disposed of.
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 1 of 7
These appeals were admitted for hearing by an order dated
04.09.2012 on the following substantial questions of law :-
"(i) Was the Tribunal correct in holding that the sum of Rs.9.80
crores, which accrued towards interest on Fixed Deposits, made by
the Assessee (to secure the bank guarantee amount furnished to the
State of Bihar) bear the character of income in the Assessee's
hands for the relevant years under appeal?
(ii) Was the Tribunal correct in rejecting the claim for
accumulation of income on the ground that Form-10 had not been
furnished along with the return but was filed during the course of
the assessment proceedings?"
The learned counsel for the appellant took up arguments on the second
question first. He submitted that insofar as ITA No.523/2012 is
concerned (which pertains to assessment year 2001-02), the Form-10
prescribed under Rule 17 of the Income Tax Rules, 1962 was filed only at
the stage of the appeal before the Tribunal. In respect of the other three
appeals, which pertain to assessment years 1998-99, 1999-2000, 2000-01
the said Form-10 has been furnished during the course of re-assessment
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 2 of 7
proceedings pursuant to proceedings initiated under Section 147 of the
Income Tax Act, 1961 (hereinafter referred to as the said Rules).
2. It is an admitted position, in view of several decisions of the Courts
including the decision of the Supreme Court in the case of CIT Vs.
Nagpur Hotel Owners Association : (2001) 247 ITR 201 (SC), that the
said Form-10 could be furnished by the assessee up to the stage of
completion of the assessment under Section 143(3) of the said Act. The
only point in issue in the present case is whether the Form-10 could be
furnished by the assessee for the purposes of Section 11 of the said Act
during the re-assessment proceedings.
3. The learned counsel for the revenue contended that Form-10 could
be produced by the assessee only up to the completion of the original
assessment proceedings under Section 143(3). He submitted that the re-
assessment proceedings are for the benefit of the revenue and the assessee
cannot take advantage of the same. Therefore, in the course of re-
assessment proceedings the assessee would not be entitled to furnish the
said Form-10 to seek the benefit of Section 11 of the said Act.
4. On the other hand, the learned counsel for the assessee/appellant
submitted that assessment included re-assessment as was evident from
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 3 of 7
Section 2(8) of the said Act. Therefore, whether the assessment was an
original assessment or as a part of a re-assessment, it would not make any
difference and that the assessee would be entitled to file the said Form-10
in either of the two proceedings and the revenue would have to take the
said form that into account.
5. Having considered the arguments advanced by the counsel for the
parties on this aspect of the matter we feel that it would be necessary to
set out the reasoning adopted by the Supreme Court in Nagpur Hotel
Owners Association (supra). The Supreme Court held as under :-
"It is abundantly clear from the wording of sub-section (2) of
section 11 that it is mandatory for the person claiming the
benefit of section 11 to intimate to the assessing authority
the particulars required, under rule 17 in Form No. 10 of the
Rules. If during the assessment proceedings, the Assessing
Officer does not have the necessary information, question of
excluding such income from assessment does not arise at all.
As a matter of fact, this benefit of excluding this particular
part of the income from the net of taxation arises from
section 11 and is subjected to the conditions specified
therein. Therefore, it is necessary that the assessing authority
must have this information at the time he completes the
assessment. In the absence of any such information, it will
not be possible for the assessing authority to give the
assessee the benefit of such exclusion and once the
assessment is so completed, in our opinion, it would be futile
to find fault with the assessing authority for having included
such income in the assessable income of the assessee.
Therefore, even assuming that there is no valid limitation
prescribed under the Act and the Rules even then, in our
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 4 of 7
opinion, it is reasonable to presume that the intimation
required under section 11 has to be furnished before the
assessing authority completes the concerned assessment
because such requirement is mandatory and without the
particulars of this income, the assessing authority cannot
entertain the claim of the assessee under section 11 of the
Act, therefore, compliance with the requirement of the Act
will have to be any time before the assessment proceedings.
Further, any claim for giving the benefit of section 11 on the
basis of information supplied subsequent to the completion
of assessment would mean that the assessment order will
have to be reopened. In our opinion, the Act does not
contemplate such re-opening of the assessment. In the case
in hand it is evident from the records of the case that the
respondent did not furnish the required information till after
the assessments for the relevant years were completed. In the
light of the above, we are of the opinion that the stand of the
Revenue that the High Court erred in answering the first
question in favour of the assessee is correct, and we reverse
that finding and answer the said question in the negative and
against the assessee. In view of our answer to the first
question, we agree with Mr. Verma that it is not necessary to
answer the second question on the facts of this case."
On going through the above extract we find that the Supreme Court
observed that it was necessary that the assessing authority must have the
information under Form-10 at the time he completes the assessment and
in its absence it is not possible for the assessing authority to give benefit
of such exclusion. Furthermore, once the assessment is so completed it
would be futile to find fault with the assessing authority for having
included such income in the assessable income of the assessee. The
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 5 of 7
Supreme Court held categorically that without the particulars of this
income as given in Form-10, the assessing authority cannot entertain the
claim of the assessee under section 11 of the Act and therefore,
compliance with the requirement of the Act will have to be at any time
before the assessment proceedings are completed. The Supreme Court
also observed that any claim for giving the benefit of section 11 on the
basis of information supplied subsequent to the completion of assessment
would mean that the assessment order will have to be reopened. The
Supreme Court noticed that the Act did not contemplate such re-opening
of the assessment.
6. The learned counsel for the revenue relied on this portion of the
finding of the Supreme Court to contend that during re-assessment
proceedings, the said Form-10 could not be furnished by an assessee.
However, we have to keep in mind the fact that while reopening of an
assessment cannot be asked for by the assessee on the ground that he had
not furnished the Form-10 during the original assessment proceedings,
this does not mean that when the revenue re-opens the assessment by
invoking Section 147 of the said Act, the assessee would be remediless
and would be barred from furnishing Form-10 during those assessment
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 6 of 7
proceedings. Consequently, insofar as the second question is concerned
and with regard to the appeal No.s 524/2012, 525/2012 and 526/2012, the
same has to be answered in favour of the assessee/appellant and against
the revenue. However, with regard to the ITA No.523/2012 because the
Form-10 was filed only before the Tribunal, the question has to be
decided, in that appeal, against the assessee and in favour of the revenue.
7. In view of the fact that we have decided the question No.2 as
above, the learned counsel for the appellant does not press for a decision
on question No.1.
As a result appeal no.523/2012 is dismissed. The other appeals are
allowed to the extent indicated above. There shall be no order as to costs.
BADAR DURREZ AHMED, J
JANUARY 10, 2013
ITA Nos.523/2012, 524/2012, 525/2012 & 526/2012 Page 7 of 7