Rajasthan H.C : the same is not applicable to the case of assessee inasmuch as the new provisions of s. 161(1A) were inserted w.e.f. 1st April, 1985, much after the delivery of the judgment by the Hon’ble apex Court and further the facts and circumstances of that case are distinguishable from the case of the assessee ?

High Court Of Rajasthan

Assistant Commissioner Of Income Tax vs. Ajay Vijay Traders

Sections 161(1A), 260A

Asst. year 1997-98

B.J. Shethna & Prakash Tatia, JJ.

DB IT Appeal Nos. 7 & 18 of 1999

22nd February, 2000

Counsel Appeared

Sandeep Bhandawat, for the Appellant : None, for the Respondent

JUDGMENT

BY THE COURT :

The appellant Asstt. CIT, Circle, Jodhpur, has filed this income-tax appeal against the order dt. 9th Nov., 1998, received on 9th Dec., 1998, passed by the Tribunal, Jaipur, in I.T.A. No. 586/Jp/92 for the asst. yr. 1997-98.

This appeal was initially placed for admission before the Division Bench consisting of Hon’ble Shri Shivraj Patil (the then Hon’ble Chief Justice) and Hon’ble Justice Bhagwati Prasad. After hearing the learned counsel Shri Sandeep Bhandawat for the appellant, this appeal was dismissed by brief reasoned order because according to their Lordships no substantial question of law was arising in appeal for consideration and on the admitted facts the Tribunal did not find any merit in the appeal filed by the Revenue with the observation that though the learned Tribunal has not specifically referred to proviso to s. 161(1A), but it applied the law correctly to the admitted facts of the case and decided the matter.

2. The aforesaid order passed by the Division Bench of this Court [reported as CIT vs. Ajay Vijay Traders (2001) 167 CTR (Raj) 186] was challenged by the appellant before the Hon’ble Supreme Court by way of Civil Appeal Nos. 872 of 877/2001. All those civil appeals were disposed of by an order dt. 25th Jan., 2001. [reported as Asstt. CIT vs. Ajay Vijay Traders (2001) 167 CTR (SC) 188]. It is a brief order which we would like to reproduced, which is as under : “Special leave granted. After hearing the counsel for the parties, we are of the opinion that the High Court should have admitted the appeals under s. 260A of the IT Act, 1961 and decided the cases on merits. We, accordingly, allow the appeals, set aside the judgments of the High Court and restore the appeals filed by the appellant on the board of the High Court. We make it clear that we are not expressing any opinion on the merits of these cases.” On the strength of the above order, it was submitted by learned counsel Shri Bhandawat that this Court has no option but to admit this appeal and after issuing notice to the other side decide the same. It is true that Hon’ble Supreme Court has observed in the order that High Court should have admitted the appeals under s. 260A of the IT Act, but at the same time their Lordships have also said that High Court should have decided the cases on merits.

3. We must state that this is neither miscellaneous appeal nor a regular first appeal or even special appeal which can be entertained easily by this Court. This is an appeal under s. 260A of the IT Act. We would like to reproduce the relevant provisions of s. 260A of the Act, which is as under : “Appeal to High Court : Sec. 260A. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2)…………… (a)…………..(b)…………… (c)…………… (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question : Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue : (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Tribunal by reason of a decision on such question of law as is referred to in sub-s. (1).” This provision of appeal under s. 260A of the IT Act is almost pari materia to the provision of s. 100, CPC for second appeal.

Before coming to the conclusion as to whether any question much less substantial question of law is involved in this appeal, we would like to narrate some important and relevant facts, which are necessary for the adjudication of the case because we are suppose to dispose of this appeal on merits as directed by the Hon’ble Supreme Court, which are as under : Shri Ghanshyam Das crated a trust by trust deed, dt. 12th April, 1982, for the benefit of children of his sister Smt. Bhagwati Bai. Shares of beneficiaries were specific and determined. Trustees were only the representatives of the assessee of beneficiaries. Invoking the provisions of s. 161(1A) the appellate authority by applying the marginal rate instead of maximum rate of tax assessed the total income of the trust relying upon the judgment of Supreme Court in CWT vs. Trustees of H.E.H. Nizam’s Family (Remainder Wealth Trust 1977 CTR (SC) 306 : (1977) 108 ITR 555 (SC) : TC 67R.316. In IT appeal the Tribunal observed that the cases on hand before it were similar to the cases decided by the Special Bench of the Tribunal in Mohd. Omer’s Family Trust vs. ITO (1992) 40 ITD 1 (Hyd) and accordingly all the appeals filed by the Revenue were dismissed. The same were challenged by the Department by way of this and other five appeals. Mr. Bhandawat, learned counsel for the Department submitted that the following two substantial questions of law are arising in this appeal, which are as under : “1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the decision of the CIT(A) that charging of tax at the maximum marginal rate in the status of AOP is not valid, ignoring the specific and overriding provisions of s. 161(1A) of the Act ?” 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in relying upon the judgment of Hon’ble apex Court cited at 1977 CTR (SC) 306 : (1977) 108 ITR 555 (SC) : TC 67R.316 in spite of the fact that the same is not applicable to the case of assessee inasmuch as the new provisions of s. 161(1A) were inserted w.e.f. 1st April, 1985, much after the delivery of the judgment by the Hon’ble apex Court and further the facts and circumstances of that case are distinguishable from the case of the assessee ?”

6. The aforesaid questions of law are at p. 6 para 5 of this appeal. On facts, the appellate authority and the Tribunal were required to decide as to whether marginal rate or maximum rate should be applied. On facts, stated above, in our considered opinion, the appellate authority as well as learned Tribunal have not committed any error in coming to the conclusion that in the instant case marginal rate would only apply and not the maximum rate. Thus, in our considered opinion, having carefully gone through the orders passed by the Tribunal and appellate authority, we are of the opinion that none of the aforesaid questions framed by Shri Bhandawat for the Department can said to be a question much less substantial question of law, which is required to be decided by this Court. The appeal can only be admitted if the appellant makes out a case that in the instant case substantial question of law of public importance is arising which requires to be decided by this Court otherwise not.

Accordingly, we do not find any substance or merit in this appeal as the appellant fails to make out any case for adjudication of substantial question of law. Therefore, this appeal fails and is hereby dismissed.

IT Appeal No. 18 of 1999

For the reasons recorded in D.B. Income-tax Appeal No. 7/99, this appeal is also dismissed. Stay petition is also dismissed.

[Citation : 254 ITR 642]

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