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2016 (6) TMI 535 - GUJARAT HIGH COURT

2016 (6) TMI 535 - GUJARAT HIGH COURT - TMI - Refund of tax paid due to loss brought forward - losses for the earlier year could be decided only after final decision by the tribunal that Royalty was not taxable - Held that:- The assessee agreed to said royalty income being substantially taxed in the assessment year 1996-1997. This communication dated 21.4.2002 was made by the assessee after the Commissioner(Appeals) dismissed the appeal and confirmed the addition made by the Assessing Officer. T .....

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itioner, one must realise that the petitioner is in a writ petition which is entirely a discretionary remedy. When we find from the facts that the petitioner has no basis for contending that the income of ₹ 4,94,20,595/- of royalty cannot be in law taxed for the assessment year 1996-1997, merely because the Assistant Commissioner of Rajkot passed an order which in plain terms baffles us and on closer scrutiny is not what the Tribunal ever directed, we would certainly not be persuaded to gr .....

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for a sum of ₹ 3,76,74,095/-. The petitioner has prayed for consequential direction for payment of such sum with interest. 2. Brief facts are as under. For the assessment year 1996-1997, the petitioner company had filed the return of income. The Assessing Officer framed assessment under section 143(3) of the Income Tax Act, 1961 ( the Act for short) on 20.3.1998 raising nil demand. This assessment was however, reopened and reassessment order was passed on 6.7.2001 in which the Assessing O .....

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6-1997. Simultaneously, the same income was also taxed on protective basis in the assessment year 1997-1998. 5. After the Commissioner (Appeals) dismissed the petitioner's appeal, confirming the addition of royalty income but before the appeal of the petitioner was decided by the Tribunal, on 21.4.2002, the petitioner wrote to the Assistant Commissioner of Income tax and stated as under: This has reference to CIT (A) s appellate order dated 13-02-02 and his order dated 12-03-02 u/s 154. We r .....

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96-97, which has been reopened. Subsequently, the reassessment for A.Y. 1996-97 has been made by an order dated 06-07-01. In paragraph 4 of this assessment order, it has been mentioned that this income of ₹ 4,94,20,595 has been taxed on substantive basis. This addition has also been confirmed by the CIT (A) vide paragraph 5 of the appellate order dated 20-11-01. In view of the above, this income is required to be reduced in the computation of income for A.Y. 1997-98. After this reduction, .....

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earliest with interest. 6. It appears that on the basis of the said communication of the petitioner dated 21.4.2002, the department also gave relief to the petitioner for subsequent assessment year 1997-1998. by deleting the protective assessment for the said year. 7. On 30.5.2005, the Tribunal decided the petitioner's appeal for the assessment year 1996-1997 in the following manner : We have heard the rival contentions. We find that assessee has entered into agreement with M/s Ajanta Elect .....

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he assessee has offered this taxation in the year under consideration, therefore, we restore this issue to the file to the Assessing Officer to verify the same. If the assessee has offered for taxation in the year under consideration, then no addition is required on protective basis in assessment year 1997-98. We, therefore, reverse the finding of the Commr. of Income Tax (Appeals) and restore this issue to the Assessing Officer for examination afresh in accordance with after providing the reaso .....

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me of the assessee is recomputed as under : Total income after giving effect to the CIT(A)-IV Rajkot Order No. CIT(A)IV/014/01-02 dtd 7.12.2001 (Appeal effect order dt 7.1.2002) Rs.11,82,66,340 Less - Relief allowed by ITAT Addition of accrued Royalty Income made by Assessing Officer remanded back by ITAT Rs.4,94,20,595 Revised total income Rs.6,88,45,745 Modified to the above extent. Issue revised demand notice and challan/RO accordingly after due verification. 9. On the basis of this order dat .....

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e for tax for the assessment year 1996-1997 and in lieu thereof requested for deleting the protective assessment made in the assessment year 1997-1998. The department had acted on such request and granted the benefit in subsequent year. The assessee now cannot resile from such position and claim deletion of income also for the assessment year 1996-1997. 10. We have heard learned counsel for the parties and perused the documents on record. From the record, it clearly emerges that the issue of tax .....

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ched the department by writing letter dated 21.4.2002 and requested that since the income is being substantially taxed for the assessment year 19961-997, the effect of protective assessment for the assessment year 19971-998 be deleted and appropriate adjustments may be made. He pointed out that as a consequence, there would be a loss in the assessment year 19971998 which would be carried forward in the assessment year 1998-1999 and the assessee would be entitled to refund for the said assessment .....

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essment year 1996-1997. This would be clear from the impugned order dated 7.7.2015 passed by the Assistant Commissioner in which while rejecting the petitioner's request for refund of sum of ₹ 3,76,74,095/- with interest, he conveyed as under : The claim made by you in this regard has been verified. On verification of records it is seen that the claim of refund is based on taxability of royalty receipt of ₹ 4,94,20,595/- . On Perusal of records it is noticed that while finalizing .....

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total income ₹ 12,33,27,737/- . The amount of royalty receipt of ₹ 4.94 crore was added to total income on substantive basis which was taxed on protective basis in the asst. For A.Y 97-98. An appeal was filed by you before the ClT(A)lV, Rajkot against the said order for A Y 96-97. The CIT(A) vide his order dated 07.12.2001 decided the issue relating to taxability of royalty receipts on substantive basis in AY 96-97, in favour of the department. After giving effect to ClT(A) s order t .....

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uch credits was also filed alongwith the said letter Accordingly on the basis of this letter the A0 vide order dated 29.04.2002, giving effect to order of the CIT(A) for A Y 1997-98 reduced an amount of ₹ 4,94,20,595/- from the assessed income and loss of ₹ 3,86,71,485/- was determined. The loss of ₹ 3,86,71,485/- determined for A.Y. 96-97 was allowed to be c/f which again was reduced from the income of the assessee in order u/s. 154 for A.Y. 98-99 passed on 03.05.2002 This exe .....

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ther liability for later years i.e. 1997-1998 even on protective basis. The Tribunal resultantly placed the matter before the Assessing Officer for verifying these aspects and passing a fresh order. 13. In view of such facts, the assessee now cannot turn around and claim refund of the entire tax also for assessment year 1996-1997 on the premise that the Tribunal had allowed the appeal or that the Assessing Officer while giving effect to the order of the Tribunal had recomputed the income of the .....

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nt Commissioner, Rajkot in his order dated 3.8.2005 made a complete mess of the things by treating the order of the Tribunal as one of giving total relief to the petitioner in terms of taxability of the income itself. It was a total non application of mind on his part. Nevertheless, the petitioner cannot benefit out of the same. Firstly, long before the Tribunal passed the said order dated 30.5.2005, the petitioner had already approached the department and conveyed that the protective assessment .....

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