ITAT ALLAHABAD BENCH
Obeetee (P.) Ltd.
versus
Additional Commissioner of Income-tax
IT APPEAL NO. 249 (All.) OF 2011
[ASSESSMENT YEAR 2005-06]
Date of Pronouncement – 23.11.2012
ORDER
A.L. Gehlot, Accountant Member
This is an appeal filed by the assessee against the order dated 15.09.2011 passed by the ld. CIT(A), Allahabad for the Assessment Year 2005-06.
2. The assessee has raised the following grounds of appeal :-
“1. Because “CIT(A)” has erred in law and on facts in holding to the effect that
(a) Addl. CIT, Range-III, Mirzapur stood validly vested with the jurisdiction of Assessing Officer in the case of the “appellant”, in terms of Notification No.267/201/F.No.187/5/2001 dated 17.09.2001; and
(b) the appellant having not objected to the assumption of jurisdiction Assessing Officer by Addl. CIT, Range – III, Mirzapur, such objection could not have been raised at the appellate stage.
and in upholding the validity of assessment order dated 29.12.2008 passed by the Addl. CIT Range-III, Mirzapur.
2. BECAUSE the ACIT, Mirzapur having initiated “regular assessment-related proceedings” by issue of notice under section 143(2), he continued to remain vested with the jurisdiction of Assessing Officer in the case of the appellant and such jurisdiction could not have been divested and conferred on the Addl. CIT, Range-III, Mirzapur without there being an order passed by the CIT, Allahabad under section 127, after complying with the procedure laid down therein.
3. BECAUSE various case laws as have been referred to and relied upon by CIT(A), while upholding the jurisdiction of Addl. CIT, Range-III, Mirzapur to act as Assessing Officer and the validity of assessment order dated 29.12.2008, had been rendered in all together different context and decision based on the said case laws is wholly vitiated as the same is violative of well laid rule of following a judicial precedence.
4.1 BECAUSE payment of guarantee commission could not have been disallowed on the ground that
(a) the payment had been made in violation of the guidelines issued by RBI as given to scheduled banks ; and
(b) such a violation is opposed to public policy and is hit by the explanation below section 37.
4.2 BECAUSE while upholding the dis allowance of guarantee commission as aforesaid, “CIT(A)” has missed to note and failed to consider that
(a) instructions contained in the guidelines issued to scheduled banks, were of advisory in nature, and did not provide for any penal consequence in the event of failure to comply with the same;
(b) such instructions were of advisory nature, meant to be followed by scheduled banks and such scheduled banks were given instruction to relax the condition in appropriate cases;
(c) in the case of the appellant, such relaxation had actually been granted also by other banks;
(d) in any case in the absence of any over-riding provision contained in the RBI Act, such “instructions of advisory nature” could not be equated with law as enacted by the Parliament ; and
(e) In any case, violation of such instructions being not inviting any punitive action, violation of the same could not be said to be opposed to public policy as envisaged in the explanation below section 37 of the Act.
and, accordingly, the view taken by the “CIT(A)” is wholly vitiated.
4.3 BECAUSE the appellant’s case of admissibility of guarantee commission amounting to Rs. 81,60,000 was based on well laid principles of law, duly supported by direct authorities, and the decision arrived at by the “CIT(A)” in disregard of such well laid “principles” and decided case laws, is wholly unsustainable.
5.1 BECAUSE the “CIT(A)” has erred in law and on facts in upholding the disallowance of expenses reimbursed to Obeetee Inc. (WOS) USA
