AVOIDING REPETITIVE APPEALS - SEC.158A OF INCOME TAX ACT 1961
It is a vox populi that the judiciary system in India consumes lot of time to come up with a judgement and cases are piling up day by day. A lot many instances have been noticed where the grounds of appeal in two or more cases are too similar but unfortunately they had a run up to the High court. The Income tax law does not force the assessee to spend his hard earned money to fight his case every time. Amongst the plethora of sections making up our tax law, lies a rather obscure provision which is Sec.158A that deals with remedy for avoiding repetitive appeals. In fact this is a unique section found inserted in the Income Tax and Wealth Tax act.
It is a non-obstante clause in Sec.158A which bestows the assessee with an unconditional right to claim before the concerned Assessing officer or the appellate authority that there is another case with an identical (there is no emphasis on exactness of one another) question of law pending before the High court or Supreme Court and the decision of the court in the above case be applied to his case and that he will not further go on appeal when the same decision is applied. Thus the essence here is the pendency of any identical case before a High court or Supreme Court. Prima facie, all that is required on the part of the assessee is to make a declaration in a Form No.8 (as per Rule 16) which is quite a simple one and submit in duplicate or triplicate as the case may be depending on whether the case is pending with the Commissioner (Appeals) or Appellate tribunal. As a cross verification the appellate authority will get the reference of the Assessing officer and decide whether to admit the claim or not. This chapter had come to existence since 1.10.1984.
Consider a simple or if not, a rather straightforward case of allowance of depreciation. There have been umpteen cases contested in the past where the unanimous question of law involved was whether depreciation depends on the usage of the asset or not. To cite a few,
1. Used’ denotes actually used and not merely ready for use - Dineshkumar Gulabchand Agrawal v. CIT [2004] 267 ITR 768/ 141 Taxman 62 (Bom).
2. Mere preparations for use will not suffice - CIT v. Suhrid Geigy Ltd. [1982] 133 ITR 884 (Guj.)/CIT v. Jiwaji Rao Sugar Co. Ltd. [1969] 71 ITR 319 (MP)(App.).
3. Where assets were not at all used due to lock-out, depreciation cannot be allowed - CIT v. Oriental Coal Co. Ltd. [1994] 206 ITR 682/76 Taxman 240 (Cal.).
It may be noted that the questions of law in all the above cases are not just identical, but in fact are same!
Another popular substantial question of law that floats around quite often in the Tribunals and High courts is ‘whether income from sale of shares is a capital gain or business income’. The safest reply to this intriguing question is ‘to decide based on facts and circumstances’ and which is the central theme of majority of decisions is. Of course an exhaustive list of guidance is also available for deciding on this question. Still there has been an addition into the continuum which is the case of Gopal Purohit (2009) 122 TTJ 87 (Mum) where the Bombay High court put the issue to rest in favour of the assessee by treating the Income from Investment account as Capital Gains. But there was already another judgement expounding the same principles in Sarnath Infrastructure 120 TTJ 216 (Luck) case. It is really bewildering as to why the same issues in various disguises are raked up time and again despite availability of precedence. This apart there is substantial number of such decisions by Tribunal (ITAT) as well. For e.g.
· Management Structure & Systems vs. ITO (ITAT Mumbai)
· Smt Sadhana Nabera vs. ACIT (ITAT Mumbai) – It is saddening that the same Tribunal at one point of time was saddled with repetitive tasks.
· Sugam Chand C. Shah vs. ACIT (2010) 37 DTR 345 (Ahd)(Trib.)
With due regard to the right of an assessee or the department to go on appeal in their specific case, considering the investment in time and money for this sake, it is hard to understand why such a handy clause in Sec.158A is not being put to use. Needless to say, there are numerous substantial questions of law like these.
Perhaps the following changes may be workable to arrest this frenzied appealing and fine tune the situation,
1. Extending the proviso in Sec.158A to include cases with identical question of law that has been already decided. Currently it is including only the pending cases before the HC or SC.
2. Why not the department be required by CIT (Appeals) or Tribunal to submit a similar declaration as to not to raise the same issue again when another identical case is resolved in the Courts. May be this is now just a fantasy.
3. Extension of the proviso to Tribunal as well. The benefit in this case could be that Tribunal is the final fact finding authority and any decision by it could be tailor made for a particular situation. Thereafter where a fresh case with identical situation arises the consensus can be accomplished.
4. Prevention is better than cure. Assessees across the board may be encouraged to use the AAR (Authority for Advanced Ruling) route. Currently many non residents do reap the benefits under Sec.245Q of the IT act, 1961. The advantage here is receipt of decision within six months of application and also given that the order so passed being a binding one on the department.
Everybody is equal in the eyes of the law and there is absolutely no place for contradicting judgments which is also an embedded theme in this article.
CAclubindia
