COMMISSIONER OF INCOME TAX: DELHI -I Vs. BHARTI AIRTEL LIMITED
August, 12th 2013
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ INCOME TAX APPEAL NO. 294/2013
Date of decision: 19th July, 2013
COMMISSIONER OF INCOME TAX: DELHI -I
Through Mr. Abhishek Maratha, Sr. Standing
Counsel & Ms. Anshul Sharma, Advocate.
BHARTI AIRTEL LIMITED
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
SANJIV KHANNA, J. (ORAL):
This appeal by the Revenue, which pertains to Assessment Year
2005-06, has to be dismissed in view of the authoritative
pronouncement of the Supreme Court in Commissioner of Income Tax
versus Alagendran Finance Limited, (2007) 293 ITR 1 (SC).
2. Relevant facts in brief may be noticed. Return filed by the
assessee for Assessment Year 2005-06 was taken up for scrutiny and
income was assessed at Rs.860,18,30,950/- vide assessment order
dated 31st December, 2007 after the setting off of brought forward
loses and unabsorbed depreciation amounting to Rs.1941,17,35,146/-.
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3. There appears to be another order under Section 154 read with
Section 143(3) dated 7th March, 2008, where the income under the
normal provisions was assessed as "nil" after setting off brought
forward losses and unabsorbed depreciation and the book profits were
assessed at Rs.1724,82,75 449/- under Section 115JB of the Act.
4. Subsequently, the Assessing Officer issued notice under Section
147 and an order under Section 147 read with Section 143(3) dated 10th
December, 2009 was passed. In the re-assessment order, two additions
were made in respect of non-deduction of tax at source on payment of
interest to ABN Amro Bank, Stockholm Branch. The second addition
was made on account of ESOP expenses. The said order also discusses
set off or brought forward loss or unabsorbed depreciation.
5. Subsequently, the Commissioner of Income Tax Delhi - I made
an order under Section 263 of the Act dated 24th March, 2011 for
failure to deduct TDS under Section 194H on free air time provided to
distributors and under Section 194J on roaming charges paid to other
network operators. The Commissioner invoked Section 40(a) (ia) to
make the said disallowance.
6. Section 263(2) of the Act postulates and prescribes time limit of
two years as it stipulates that no order in revision will be passed by the
Commissioner after expiry of two years from the end of the financial
year in which the order sought to be revised was passed.
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7. The question raised is whether the first order under Section
143(3) dated 31st December, 2007 or the second order under Section
147 read with Section 143(3) dated 10th December, 2009 will be the
starting point of limitation under Section 263(2) of the Act. If the first
order dated 31st December, 2007 is taken as the starting point, the order
passed under Section 263, dated 24th March, 2011 is barred by
limitation, but if we treat the second order dated 10th December, 2009
under Section 147/143(3) as the starting point, the order passed on 24th
March, 2011 will be within time.
8. It is factually correct and cannot be disputed that the two
aspects/questions, which have been dealt with and additions which
have been made in the order under Section 263 dated 24th March, 2011,
have not been dealt with or examined in the second assessment or the
re-assessment order dated 10th December, 2009. The second order or
the re-assessment order is on different aspects. In these circumstances,
the decision of the Supreme Court in Alagendran Finance Limited
(supra) is clearly applicable and the following ratio is binding on us:-
"We, therefore, are clearly of the opinion that keeping in
view the facts and circumstances of this case and, in
particular, having regard to the fact that the
Commissioner of Income-Tax exercising its revisional
jurisdiction reopened the order of assessment only in
relation to lease equalisation fund which being not the
subject of the reassessment proceedings, the period of
limitation provided for under sub-section (2) of section
263 of the Act would begin to run from the date of the
order of assessment and not from the order of
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reassessment. The revisional jurisdiction having, thus,
been invoked by the Commissioner of Income Tax
beyond the period of limitation, it was wholly without
jurisdiction rendering the entire proceeding a nullity."
9. In the said case, second or re-assessment order was passed under
Section 147 of the Act. Order under Section 263 passed by the
Commissioner was held to be barred by limitation as the subject matter of
additions made in the said order were not dealt with in the reassessment
order. Thus doctrine of merger it was held would not apply and limitation
would begin from the date of the first or original assessment order. It has
been held that once reassessment order was passed, original
underassessment was set aside, to the extent of underassessment but not in
respect of matters covered by the original assessment and not subject matter
of reassessment proceedings or order. Earlier judgments in Hind Wire
Industries Limited versus Commissioner of Income Tax, (1995) 212 ITR
639 (SC), Commissioner of Income Tax vs. Sun Engineering Works
Private Limited (1992) 198 ITR 297 (SC) and other cases, were examined
before the said opinion and ratio was expounded.
The appeal is accordingly dismissed.
SANJIV KHANNA, J.
SANJEEV SACHDEVA, J.
JULY 19, 2013
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