Mandhana Industries Ltd Vs Pr. CIT (Bombay High Court)
On reading the provisions contained in Chapter XIX-A of the Act, a clear picture that emerges is that an assessee can apply for settlement of a case as long as same is pending. Once such an application is filed (and in case of application filed before 1.6.2007) allowed to proceed further, all powers vested in income tax authority would vest in Settlement Commission in relation to such a case. The Settlement Commission would continue to enjoy such exclusive jurisdiction till the application is either rejected, declared as invalid or not allowed to proceed further. As provided in sub-section (2) of Section 245HA, where the proceedings before the Settlement Commission abate, the Assessing Officer or the Income Tax Authority as the case may be before whom the proceedings at the time of making the application is pending, would dispose of the case in accordance with the provisions of the Act as if no application under Section 245C has been made. Likewise under sub-section (7) of Section 245D, where a settlement becomes void, the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded and the concerned income tax authority would complete such proceedings at any time before expiry of two years from the end of financial year in which the settlement became void. These provisions make it abundantly clear that a case could either be dealt with by the concerned income tax authority or the Settlement Commission but not both. As long as the application for settlement is pending before the Settlement Commission, the Settlement Commission enjoys exclusive jurisdiction over the case, to the exclusion of the any authority ousting the jurisdiction of the concerned income tax authority. Where the application for settlement either abates or becomes void, the Authority before whom the proceedings were pending on the date of filing of the application for settlement would pass order in terms of provisions of the Act. The Act, thus envisages only one order concerning a case of the assessee, it may either be an order of settlement passed by the Settlement Commission or an order of assessment passed by the Assessing Officer but not both. We are conscious, the proviso to sub-section (5) of Section 245BA mentions a case or a matter which can be referred to a bench of three members of the Commission. This distinction, however, can be easily explained. In a given situation a ‘case’ may require attention of three members. Situation may also arise where only a matter arising in a case but not the entire case may require reference. Even Mr. Mistri, learned counsel for the petitioner did not argue to the contrary. His contention, if we understand correctly was that the Settlement Commission would pass order only in respect of matters before it and no other. Therefore, the revenue authorities while giving effect to the order of Settlement Commission are bound to consider issues which are not part of settlement proceedings.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. We have heard learned counsel for the parties at length.
2. The petitioner Mandhana Industries Ltd, a public limited company has challenged an order dated 28.2.2018 passed by the Principal Commissioner of Income Tax, copy of which produced at ‘Annexure Q’ to the petition. By the said order, the Commissioner had rejected the revision application filed by the petitioner company under Section 264 of the Income Tax Act, 1961 (“the Act” for short).
3. The petitioner is engaged in the business of manufacturing textiles and garments. The petitioner has set up its manufacturing units at two locations i.e Tarapur in Maharashtra and at Banglore. The petitioner would point out that the Government of India had launched the Technology Upgradation Fund Scheme (“the scheme” for short) w.e.f. 1.4.1999. Under the scheme, to encourage investment in technology upgradation in textile and jute industry, certain financial assistance was made available to domestic industry. Said benefit would be available for modernization or expansion of the existing units as also for setting up new units of textiles and jute industry.
4. The petitioner received reimbursement of interest expenses under the said scheme for assessment years 2006-07 to 2013-14, breakup of which is as under:-
