2010 (11) TMI 753 - AT - Income Tax

Maintainability of appeal - Appealable orders - Provision of section 246A(1)(a) - assessee challenged the non-granting of credit for withholding tax - Held that - As per the case of CIT vs. Ashoka Engineering Co. 1992 (1) TMI 4 - SUPREME Court & Gopi Lal vs. CIT 1966 (10) TMI 11 - PUNJAB High Court it was held that statute pertaining to right of appeal should be given a liberal construction since they are remedial. A right of appeal should not be restricted or denied unless such a construction is unavoidable. The Hon ble Court went further to hold that in case of doubt the appeal should also be allowed rather than denied. In the light of the above precedents favouring a reasonable practical and liberal interpretation to a provision conferring a right of appeal the expression amount of tax determined used in section 246A(1)(a) should be widely construed as covering all aspects upto the determination of final tax liability. It should not be limited only to the calculation of tax on the total income as per the prescribed rates of taxation. In that view of the matter the adjudication by the CIT(A) on the question of not granting relief in respect of taxes paid by the assessee or tax deducted at source or tax withheld u/ss 90/91 on behalf of the assessee has to be construed as the part of the process of determination of tax covered under clause (a) of section 246A(1). Thus CIT(A) was not justified in dismissing the appeal of the assessee as not maintainable on the aspect of not allowing of credit by the AO of tax withheld on behalf of the assessee u/ss 90 and 91.

Summary

Issues Involved:
1. Maintainability of the appeal before the Commissioner of Income-tax (Appeals).
2. Validity of grounds of appeal under Section 246A.
3. Direction to entertain the appeal and decide on merits.
4. Direction to the Assessing Officer to grant tax credit under Sections 90 and 91 of the Income Tax Act.

Detailed Analysis:

1. Maintainability of the Appeal:
The primary issue was whether the appeal filed by the assessee was maintainable under Section 246A of the Income Tax Act. The Commissioner of Income-tax (Appeals) had dismissed the appeal on the grounds that it did not fall within the permissible categories under Section 246A. The Tribunal examined the relevant provisions of Section 246A, which allows an appeal to the Commissioner (Appeals) against an order of assessment under Section 143(3) to the amount of tax determined. The Tribunal concluded that the non-granting of credit for withholding tax under Sections 90/91 directly affects the determination of the amount of tax payable or refundable, thus making the appeal maintainable under Section 246A(1)(a).

2. Validity of Grounds of Appeal:
The Commissioner of Income-tax (Appeals) had held that the grounds of appeal did not survive as valid grounds under any clauses of Section 246A. The Tribunal disagreed, stating that the grounds raised by the assessee, particularly the non-granting of credit for withholding tax, fall under the "amount of tax determined" as mentioned in Section 246A(1)(a). The Tribunal emphasized that the term "amount of tax determined" encompasses not only the calculation of tax on total income but also adjustments for taxes paid, including withholding tax under Sections 90/91.

3. Direction to Entertain the Appeal and Decide on Merits:
The assessee requested that the Commissioner of Income-tax (Appeals) be directed to entertain the appeal and decide it on merits. The Tribunal, after establishing the maintainability of the appeal, directed that the appeal should be entertained and decided on its merits. This directive was based on a liberal and practical interpretation of the right to appeal, as supported by precedents from the Hon'ble Supreme Court and the Hon'ble Bombay High Court.

4. Direction to Grant Tax Credit under Sections 90 and 91:
The assessee sought a direction for the Assessing Officer to grant credit amounting to Rs.8,38,764 under Sections 90 and 91 of the Income Tax Act, as claimed in the Return of Income. The Tribunal noted that the Assessing Officer had not provided any reason for not allowing the credit for withholding tax in ITNS-150A, despite the relevant column for DIT relief being left blank. The Tribunal held that the Assessing Officer should have included the amount of Rs.8,38,764 in ITNS-150A for computing the refundable amount. Consequently, the Tribunal directed the Assessing Officer to modify ITNS-150A and grant the consequential refund due to the assessee.

Conclusion:
The Tribunal allowed the appeal, holding that the learned CIT(A) was not justified in dismissing the appeal as not maintainable. It directed the Assessing Officer to grant the tax credit for withholding tax under Sections 90 and 91 and to modify ITNS-150A accordingly. The Tribunal emphasized a liberal and practical interpretation of the right to appeal, ensuring the assessee's grievances were addressed comprehensively.