Case Law Details
CIT – International Taxation Vs Saif Partner India IV Ltd (Delhi High Court)
Introduction: The Delhi High Court, in a recent judgment regarding CIT – International Taxation, emphasized the necessity of satisfying twin conditions under Section 263. The court deemed an order passed under this section invalid without fulfilling both requirements.
Detailed Analysis: The case, identified as ITA 809/2023, pertains to the Assessment Year 2017-18. The appellant/revenue sought to challenge the Income Tax Appellate Tribunal’s order dated 13.02.2023, which had set aside the Commissioner of Income Tax (Appeals) order dated 27.03.2022. The CIT(A) had, in turn, nullified the assessment order dated 09.12.2019 by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961.
The crux of the matter lies in the respondent/assessee’s claimed loss upon the transfer of shares involving Indian entities, deemed erroneous and prejudicial by the CIT(A). However, a crucial revelation from the notes of accounts and the respondent/assessee’s acknowledgment clarified that the cumulative loss of Rs.62,85,40,289/- would not be carried forward.
Dr. Shashwat Bajpai, representing the respondent/assessee, confirmed this stance, asserting that no prejudice would be caused to the revenue due to the non-carriage of the mentioned loss. Consequently, the court considered the statement by Dr. Shashwat Bajpai, determining that the second condition necessary for invoking powers under Section 263 was not fulfilled.
Conclusion: The Delhi High Court disposed of the appeal based on Dr. Shashwat Bajpai’s statement, which binds the respondent/assessee. The judgment underscores the significance of meeting both conditions—erroneous and prejudicial to the interest of the revenue—when invoking Section 263. This serves as a precedent for similar cases, emphasizing the need for a thorough assessment of the twin conditions before declaring an order valid under the said section.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 67282/2023 [Application is filed on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal]
1. This is an application moved on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal.
1.1 According to the appellant/ revenue, there is a delay of 130 days in re-filing the appeal.
2. Dr Shashwat Bajpai, learned counsel, who appears on behalf of the respondent/assessee, says that he would have no objection if the delay in re-filing is condoned.
3. It is ordered accordingly.
4. The application is disposed of.
ITA 809/2023
5. This appeal concerns Assessment Year (AY) 2017-18.
6. Via the instant appeal, the appellant/revenue seeks to assail the order dated 13.02.2023 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”].
7. Via the impugned order, the Tribunal has set aside the order dated 27.03.2022 passed by the Commissioner Income Tax (Appeals) [in short, “CIT(A)] in exercise of its power under Section 263 of the Income Tax Act, 1961 [in short, “Act”].
8. The CIT(A) has via the said order set aside the assessment order dated 09.12.2019 framed by the Assessing Officer (AO) under Section 143(3) of the Act.
9. The CIT(A)’s view is that the loss claimed by the respondent/assessee upon transfer of shares concerning Indian entities was both erroneous and prejudicial to the interest of revenue.
10. The record shows that in the notes of accounts appended to the balance sheet as on 31.03.2017, the respondent/assessee had clearly indicated that it was not carrying forward the cumulative loss amounting to Rs.62,85,40,289/-. This aspect also emerges are perusal of paragraph 11 of the impugned order.
10.1 For convenience the details of the loss registered are set forth hereafter:
11. It is not in dispute that the respondent/assessee has not carried forward the aforementioned loss registered upon transfer of the shares of the Indian entities.
12. Dr Shashwat Bajpai, learned counsel, says that he has instruction to convey to the court that the said loss amounting to Rs.62,85,40,289/- will not be carried forward.
13. It is, therefore, the submission of Dr Shashwat Bajpai that in these circumstances, no prejudice can be caused to the revenue.
14. Concededly, for invoking powers under Section 263 of the Act, twin conditions have to be satisfied i.e., the order of the AO should be erroneous and prejudicial to the interest of the revenue.
15. In view of the statement made by the Dr Shashwat Bajpai, the other condition is not fulfilled. Therefore, the appeal is disposed of, based on the statement made by Dr Shashwat Bajpai; which shall bind the respondent/assessee.
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