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By Vijay Kumar

Frivolous appeals – CBDT rapped by High Court

Delhi HC imposes costs on Income Tax Department for mechanically filing frivolous appeals; says Revenue ' s attitude needs to be deprecated

THE New Year has just set in, and things have started going awry for the CBDT. In fact the CBDT ' s ' time chakra ' had entered the adversarial zone sometime late last year when the Delhi High Court had begun to take note of its frivolous appeals. It did warn the income tax authorities and also asked for detailed procedure and screening methodologies adopted by the Board before an appeal is filed before the High Courts. Even then, not much has happened, and it has exasperated the High Court which now appears to be fully convinced that most of the frivolous appeals have their origin in frivolous approach being adopted by the Revenue authorities . In the latest order of 2008 the High Court observes, "We have been noting for the last several months that the Revenue mechanically files frivolous appeals and despite our imposing costs on the Revenue from time to time it has not resulted in any re-thinking on the part of the Income Tax Department with regard to the filing of frivolous appeals. We have noted on several occasions that a large number of persons in the Registry are put to inconvenience because of the filing of frivolous appeals and even the time of the Court is wasted in dealing with unimportant appeals. On the other hand, serious matters which ought to deserve attention get sidelined because of this attitude of the Revenue which needs to be deprecated.

Income Tax

Depreciation on residential flats - no justification in restricting it to 5%; Sec 80HHC - for computation of book profit u/s 115JA , adjusted book profit is to be adopted ; Loss incurred in money-lending of surplus funds - capital loss : ITAT

The assessee company is engaged in the business of manufacturing and sale of automobile vehicles. The assessee ' s case was selected for scrutiny and completed u/s. 143(3). It was noticed by the Assessing Officer that the assessee has claimed depreciation on the five residential flats plus undivided interest in land. The AO restricted the depreciation in respect of five flats at 5% in place of 10%. The assessee was not successful with the Commissioner (Appeals) and is before the Tribunal.

Central Excise

Goods not exported - Interest payable under notification 42/ 2001CE ( N.T ) is 15% as prescribed under section 11AB & not 24% - Amendment made by notification 20/ 2007CE ( N.T ) dated 19.04.07 has retrospective effect : Tribunal

THE Apex Court in the case of Indian Tobacco Association, 2005-TIOL-109-SC- CUS , at Para 15 has held that -

“The word “substitute” ordinarily would mean “to put (one) in place of another”; or “to replace”. In Black's Law Dictionary, Fifth Edition, at page 1281, the word “substitute” has been defined to mean “To put in the place of another person or thing”, or “to exchange”. In Collins English Dictionary, the word “substitute” has been defined to mean “to serve or cause to serve in place of another person or thing”; “to replace (an atom or group in a molecule) with (another atom or group)”; or “a person or thing that serves in place of another, such as a player in a game who takes the place of an injured colleague”.

In the said judgment at Para 23, the SC has also held as under-

“It may, therefore, be safely concluded that by reason of the amended notification, the Central Government only intended to rectify a mistake and, thus, the same will have retrospective effect and retrospective operation ”.

See our columns Tomorrow for the judgements