D.B.Income Tax Appeal No.

139/2007
alongwith connected matters.
[1]

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT

JODHPUR

:JUDGMENT:

(1) Commissioner of Income Tax, Udaipur

Vs.
Hindustan Zinc Ltd.
D.B.Income Tax Appeal No. 139/2007
:::
(2) Commissioner of Income Tax, Udaipur
Vs.
Hindustan Zinc Ltd.
D.B.Income Tax Appeal No.35/2008
:::
(3) Commissioner of Income Tax, Udaipur
Vs.
Hindustan Zinc Ltd.
D.B.Income Tax Appeal No. 31/2008
:::
(4) Commissioner of Income Tax, Udaipur
Vs.
Hindustan Zinc Ltd.
D.B.Income Tax Appeal No. 117/2008
:::
(5) Commissioner of Income Tax, Udaipur
Vs.
Hindustan Zinc Ltd.
D.B.Income Tax Appeal No. 70/2008
:::
(6) Commissioner of Income Tax, Udaipur
Vs.
Hindustan Zinc Ltd.
D.B.Income Tax Appeal No.142/2008

Date of Judgment :::: 27th April 2012

PRESENT
HON'BLE MR. JUSTICE DINESH MAHESHWARI
HON'BLE MR. JUSTICE C. M. TOTLA

Mr.K.K.Bissa for the appellant

Mr.Anjay Kothari for the respondent

BY THE COURT: (per Hon'ble Dinesh Maheshwari,J.)

These six income-tax appeals by the revenue under Section

 D.B.Income Tax Appeal No.139/2007
alongwith connected matters.
[2]

260-A of the Income Tax Act, 1961 [the Act of 1961] in relation to

the same assessee, arising out of similar nature and inter-related

orders, and involving similar nature substantial question of law, have

been considered together; and are taken up for disposal by this

common judgment.

Put in a nutshell, these appeals, relating to the assessment

years 1979-80, 1980-81, and 1981-82, have their genesis in the

orders dated 29.04.2004 wherein the Commissioner of Income Tax

(Appeals), Udaipur [the CIT(A)] found that the Assessing Officer

[the AO] had failed to carry out the directions given by the Income

Tax Appellate Tribunal [ITAT] in the orders passed in the earlier

round of the proceedings when the matters were restored to the file

of the AO for decision afresh; and whereby the CIT(A) directed the

AO to deal with the issue regarding claim of higher rate of

depreciation on the building allegedly forming the part of plant and

machinery in accordance with the directions of the ITAT. The

respective appeals filed by the revenue against the aforesaid order

dated 29.04.2004 were dismissed by the ITAT by a common order

dated 20.02.2007. First three of the present appeals by the revenue

(ITA Nos. 139/2007, 35/2008, 31/2008) arise out of this common

order dated 20.02.2007. The revenue also made the respective

rectification applications under Section 154 of the Act of 1961 before

the CIT(A) who proceeded to reject the same by the common order

dated 12.08.2004. The appeals filed by the revenue against this

 D.B.Income Tax Appeal No.139/2007
alongwith connected matters.
[3]

order dated 12.08.2004 were also dismissed by the ITAT by another

order of the even date i.e.,20.02.2007. Next three appeals by the

revenue (ITA Nos. 117/2008, 70/2008, 142/2008) arise out of this

other order dated 20.02.2007.

The sum and substance of the matter remains that in the

respective orders dated 20.02.2007, the ITAT found the CIT(A)

perfectly justified in issuing directions to the AO for compliance of its

order as made in the earlier round of the same proceedings. The

ITAT, thus, found no case for interference. Assailing the orders so

passed by the ITAT and CIT(A) in these appeals, the revenue seeks

to contend that in an appeal filed after the amendment to clause (a)

of sub-section (1) of Section 251 of the Act of 1961, as made w.e.f.

01.06.2001, the Commissioner (Appeals) has no power to remand

the matter to the Assessing Officer; and hence, the order dated

29.04.2004, as passed by the CIT(A), remains wholly unauthorised.

Only the question of power of the Commissioner (Appeals)

after the aforesaid amendment being in question in these appeals,

we need not elaborate on all the factual aspects. A brief reference to

the background aspects would suffice.

The relevant background aspects in ITA No.139/2007

pertaining to assessment year 1979-80 are as follows: The

assessment in this case was earlier completed by the AO on

20.01.1983 at nil income. The appeal against this order was decided

by the CIT(A) on 08.03.1994. The assessee's appeal [ITA No.1232

 D.B.Income Tax Appeal No.139/2007
alongwith connected matters.
[4]

(JP)/94] against this order was decided by the ITAT on 22.11.2001.

In its order dated 22.11.2001, the ITAT restored essentially two

issues to the file of AO for consideration afresh namely, the issue

regarding disallowance of the provision for bad debts and written off

advances; and regarding the assessee's claim for higher

depreciation on the building, said to be the part of plant and

machinery, after inspection of the building by the AO.

Such relevant background aspects in ITA No.35/2008 in

relation to the assessment year 1980-81 are as follows: The AO

passed the assessment order dated 24.01.1984 at nil income. The

appeal was decided by the CIT(A) on 09.03.1994; and the

assessee's appeal [ITA No.1233(JP)/94] against this order was

decided by the ITAT on 23.11.2001. In this matter, pertaining to

assessment year 1980-81, the ITAT restored three issues to the file

of AO for consideration afresh namely, regarding non-allowance

towards bad debts; the claim under Section 80J; and the same issue

regarding assessee's claim for higher depreciation towards the

building after inspection of the same by the AO.

Similar are the background aspects relating to ITA No.31/2008

pertaining to assessment year 1981-82 wherein the assessment was

made on 06.03.1985, the appeal by the CIT(A) was decided on

09.03.1994, and the ITAT considered the appeal of the assessee

[ITA No.1234(JP)/94] in its similar nature order dated 23.11.2001. In

this case, pertaining to assessment year 1981-82, the ITAT restored

 D.B.Income Tax Appeal No.139/2007
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[5]

the three issues of same nature to the file of AO. In all these

appeals, the issue regarding higher depreciation for the building

remains the bone of contention.

It is borne out that the AO proceeded to decide all the

remanded cases by the different orders of the even date i.e.,

10.03.2003. The AO rejected the claim of higher depreciation

essentially with the observations that the assessee did not file the

requisite details for inspection despite granting of sufficient time.

Against the aforesaid orders dated 10.03.2003, separate appeals

were filed by the assessee on 22.04.2003 before the CIT(A). All

these appeals were decided by separate but similar nature orders

dated 29.04.2004. So far the issue at hands is concerned, regarding

the claim of depreciation, the CIT(A) found that the AO failed to

carry out the requirements of the orders as earlier passed by the

ITAT on 22.11.2001 and 23.11.2001 restoring the issue to the file of

AO. Thus, the CIT(A) did not approve of the order passed by the AO

and directed that the AO, after inspecting the constructed building

and keeping in view the directions of ITAT, should come to a finding

as to whether the building was a part of the plant and allow

depreciation accordingly. For ready reference, the observations as

made by the CIT(A) in the order pertaining to assessment year 1979-

80 could be noticed as under:-

3.2 I have considered the observations of the AO and the

contentions of the appellant. The Hon'ble ITAT, Jodhpur Bench
vide its order in ITA No.1232(JP)/94 dated 22-11-01, looking to
 D.B.Income Tax Appeal No.139/2007
alongwith connected matters.
[6]

the nature of buildings claimed as plant restored the matter back

to the AO for considering the matter afresh with the following
directions:

A characteristic of plant is that it is an

adjunct to the carrying on of a business and not the
essential site or core of the business itself.
Keeping in view the facts of the case it is
necessary to restore this issue to the file of the AO
with direction that after proper appraisal of facts
and inspection of the building constructed and
keeping in view the various judgments discussed
above, he should decide this issue afresh as to
whether the building is a plant or not..

As per the direction of the Hon'ble ITAT, the AO was to

decide whether the buildings are plant or not after proper
appraisal of the facts and inspection of the buildings constructed
and keeping in view the various judgments discussed in the order.
From the facts as discussed above it is clear that the AO has not
followed the directions of the Hon'ble ITAT. The appellant
company had submitted that name and address of the units
where the buildings were constructed as also photographs of the
buildings. The appellant company also offered its assistance for
inspecting the buildings at units. Therefore, the AO was not
justified in stating that the appellant did not furnish proper
information for inspecting the buildings. In view of the above, the
AO is directed to comply with the directions of the Hon'ble ITAT as
contained in its order dated 22-11-01. The AO after inspecting the
buildings constructed and keeping in view the above directions of
the Hon'ble ITAT should come to a finding whether the buildings
are plant or not and accordingly allow the depreciation on the
same.

Aggrieved by the aforesaid orders dated 29.04.2004, the

revenue preferred respective appeals which have been dismissed by

the ITAT alongwith other appeals in its common order dated

20.02.2007. The relevant part of the said order dated 20.02.2007

reads as under:-

ITA NO.372 to 375/JU/2004(A.Y.1979-80 to 1981-82 & 1992-93)

7. Following solitary effective common ground has been

raised by the Revenue in these appeals:

On the facts and in the circumstances of the case,

the ld. CIT(A) has erred in directing the Assessing Officer
to decide the matter afresh after inspecting the building to
ascertain whether it is forming part of plant ignoring the
material and other facts brought on record by the
 D.B.Income Tax Appeal No.139/2007
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[7]

Assessing Officer.

8. Briefly stated, the facts of this ground are that the

assessee claimed building to be eligible for higher depreciation. In
the absence of the assessee having assisted properly by
furnishing necessary details, the Assessing Officer came to hold
that higher rate of depreciation was not eligible. The ld. CIT(A)
directed the Assessing Officer to decide the matter afresh after
inspecting the building to ascertain whether or not it is forming
part of plant.

9. Having heard the rival submissions and perused the

relevant material on record, we find that the ld. CIT(A) has not
decided the issue in assessee's favour. Rather, the matter has
been restored to the Assessing Officer for deciding it afresh. The
Hon'ble Jurisdictional High Court in the case of Prem Agencies
Vs. CIT [1988] 173 ITR 110 [Raj.] has held that no infirmity can be
traced in the restoration of the matter to the lower authorities. We
observe that the ld. CIT(A) has given a simple direction that the
Assessing Officer should make inspection of the building
constructed and then decide as to whether it should be
considered as plant. In our considered opinion, there is no cause
of grievance at the Revenue's end because the issue is open at
large before the departmental authorities. We are, therefore, not
inclined to disturb the finding of the first appellate authority on this
count.

10. Similar ground raised on similar facts and finding of the ld.
CIT(A) has been assailed by the Revenue in the other years.
Both the sides are in agreement that the facts and circumstances
of this ground are mutatis mutandis similar to all the other years.
We, therefore, uphold the impugned order as it is not suffering
from any infirmity.

As noticed above, the first three appeals herein (ITA

Nos.139/2007, 35/2008 and 31/2008) have been filed against the

aforesaid common order dated 20.02.2007 whereby the ITAT has

affirmed the order passed by CIT(A) on 29.04.2004 while

essentially contending that the CIT(A) had no authority to remand the

matter to the AO after the amendment to Section 251 (1) (a) of the

Act of 1961 with effect from 01.06.2001 taking away his powers of

remand.

For completion of background aspects, it could be noticed that

as against the order dated 29.04.2004, the revenue made the

 D.B.Income Tax Appeal No.139/2007
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[8]

respective rectification applications under Section 154 of the Act of

1961 before the CIT(A) who proceeded to reject the same by the

common order dated 12.08.2004. The appeals preferred against this

order dated 12.08.2004 were dismissed by ITAT by the common

order of even date i.e., 20.02.2007. The next three appeals herein

(ITA Nos.117/2008, 70/2008 and 142/2008) relate to this other

order dated 20.02.2007.

Coming to the matters concerning rectification applications

later, appropriate it shall be to take up for consideration at the first

the three appeals (ITA Nos.139/2007, 35/2008, 31/2008) arising out

of the basic similar nature orders dated 29.04.2004 as passed by the

CIT(A) in the respective appeals filed on 22.04.2003. Similar nature

substantial question of law as formulated in these three appeals

relating to the assessment years 1979-80, 1980-81, and 1981-82

respectively reads as under:-

Whether the learned Commissioner had the power to send the

matter back to the Assessing Officer to decide the matter afresh
in view of the amendment made in Section 251 (1) (a) taking
away such power, which was made with effect from 1.6.2001,
while the appeal in the present case before the learned
Commissioner was filed on 22.04.2003?

The learned counsel for the appellant has questioned the

orders impugned essentially with the submission that for the appeals

filed on 22.04.2003 i.e., after amendment to Section 251 (1) (a), the

CIT(A) was having no power or authority to remand the matter to the

AO. Per contra, the learned counsel for the respondent assesse has

referred to the decision of the Hon'ble Supreme Court in the case of

 D.B.Income Tax Appeal No.139/2007
alongwith connected matters.
[9]

S.Shanmugavel Nadar Vs. State of Tamil Nadu & Anr.: (2003) 263

ITR 658 to submit that the orders earlier passed by the AO merged

in the orders passed by the ITAT on 22.11.2001 and 23.11.2001.

According to the learned counsel, the AO was, thereafter, duty

bound to carry out the compliance of the directions of the ITAT and if

he failed to do so, the CIT(A) cannot be faulted at directing him to

carry out the compliance of the order of ITAT that had become final.

The learned counsel also referred to the decision in the case of

Union of India Vs. Umesh Dhaimode: (2002) 176 CTR (SC) 97 to

submit that the appellate authority has power to annul the order and

the order of remand necessarily annuls the decision which is under

appeal. The learned counsel yet further referred to the decision of

the Hon'ble Gujarat High Court in the case of Commissioner of

Central Excise, Ahmedabad-I Vs. Medico Labs.: 2004 (173)

E.L.T.117 (Guj.) to submit that in relation to Section 35A of the

Central Excise Act, 1944, similar nature amendment was made by

the Finance Act, 2001 in regard to the powers of Commissioner

(Appeals); and the Hon'ble Gujarat High Court, with reference to the

decision in Umesh Dhaimode (supra), held that even after

amendment, such powers of remand have not been taken away

specifically.

The relevant provision i.e., Section 251(1) (a) of the Act of

1961 reads as under:-

251. Powers of the Commissioner (Appeals)

(1) In disposing of an appeal, the Commissioner (Appeals) shall have
the following powers-
 D.B.Income Tax Appeal No.139/2007
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[ 10 ]

(a) in an appeal against an order of assessment, he may confirm,

reduce, enhance or annul the assessment;

Noticeable it is that earlier, there existed an expression after

semicolon in the above-quoted clause (a), which conferred other

powers on the Commissioner (Appeals); and which was deleted by

the Finance Act, 2001 with effect from 01.06.2001. The said

deleted portion as occurring in clause (a) after semicolon was as

under:-

or he may set aside the assessment and refer the case back to
the Assessing Officer for making a fresh assessment in
accordance with the directions given by the Commissioner
(Appeals) and after making such further inquiry as may be
necessary, and the Assessing Officer shall thereupon proceed to
make such fresh assessment and determine, where necessary,
the amount of tax payable on the basis of such fresh
assessment;

The only question is whether for such deletion of the aforesaid

wordings in clause (a) of sub-section (1) of Section 251, the CIT (A)

was not justified in restoring the matter to the file of AO in the

present cases.

Taking into comprehension the factual scenario and

particularly the background aspects, it is, at once, clear that the CIT

(A) in his impugned orders dated 29.04.2004 has not passed an

order as if he was setting aside the order of assessment and

referring the matter back to the AO for making fresh assessment in

accordance with his directions. The fact of the matter had been that

the order as passed by the AO earlier had already been subjected to

appeal before the CIT(A) and then before the ITAT. As noticed, the

ITAT in its orders dated 22.11.2001 and 23.11.2001 restored the

 D.B.Income Tax Appeal No.139/2007
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[ 11 ]

question of claim of higher depreciation to the file of AO for decision

afresh after inspection of the building. In the orders dated

29.04.2004, the CIT(A) found that such directions of ITAT had not

been complied with. The directions of ITAT were in any case

required to be complied with by the AO. The CIT(A), in fact, had

done nothing more than issuing directions for implementation of the

order of the ITAT. In this position, when the CIT(A) was hearing the

appeal against an order of assessment passed after the directions of

ITAT, his power to annul the assessment order if found contrary to

the ITAT's directions and directing the AO to carry out the

requirements of the order of ITAT cannot be denied.

In the case of Umesh Dhaimode (supra) in relation to the

appeal under the Customs Act, 1962, the Hon'ble Supreme Court

has observed as under:-

The then Judicial Commissioner, Goa, Daman and Diu, took the
view that s.128(2) of the Customs Act, 1962, as it then read, did
not vest the appellate authority with the power to remand.
Accordingly, he set aside such order and the Revenue is in
appeal.

2. As the order under appeal itself notes, the aforesaid provision

vested the appellate authority with powers to pass such order as
it deemed fit confirming, modifying or annulling the decision
appealed against. An order of remand necessarily annuls the
decision which is under appeal before the appellate authority.
The appellate authority is also invested with the power to pass
such order as it deems fit. Both these portions of the aforesaid
provision, read together, necessarily imply that the appellate
authority has the power to set aside the decision which is under
appeal before it and to remand the matter to the authority below
for fresh decision.

Even if the amendment in the aforesaid clause (a) of Section

251 (1) has been made so as to provide that the Commissioner

( Appeals) may not set aside the assessment and refer the case
 D.B.Income Tax Appeal No.139/2007
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[ 12 ]

back to the AO for making fresh assessment with a view to help

bringing an early finalisation of the assessment, it cannot be

assumed that the CIT(A) is divested of the power to annul the

assessment and then to pass appropriate consequential order.

This apart, in the present case, as observed hereinbefore,

the factual aspect has been that the order as passed by the AO,

which was subject of appeal before the CIT(A), was not an original

order of assessment but was an order of assessment passed after

remand by the ITAT. The directions in remand order having not

been complied with, the course as adopted by the CIT(A) cannot be

said to be dehors the powers available to him under the statute.

On the facts and in the circumstances of the present cases,

we are clearly of the view that even if the appeal had been filed after

amendment to Section 251(1) (a) of the Act of 1961, the order as

passed by the CIT(A) directing the AO to decide the matter in

accordance with the directions of the ITAT cannot be said to be

unauthorised. These first three appeals (ITA Nos.139/2007, 35/2008

and 31/2008) deserve to be dismissed.

In view of what has been discussed and held hereinabove, the

issues raised in other three appeals (ITA Nos. 117/2008, 70/2008

and 142/2008) are rendered rather academic. There being no

illegality or infirmity in the principal order dated 29.04.2004, the CIT

(A) was justified in rejecting the rectification applications by the

common order dated 12.08.2004; and the ITAT was also justified in
 D.B.Income Tax Appeal No.139/2007
alongwith connected matters.
[ 13 ]

dismissing the appeals filed by the revenue by the other common

order dated 20.02.2007. The ITAT, in fact, decided four appeals

together, three of them relating to the present appeals and another

one relating to the assessment year 1992-93 with a short common

order that is reproduced in extenso as under:-

This is a bunch of four appeals, which have been filed by the

Revenue in relation to Assessment Years 1979-80, 1980-81,
1981-82 and 1992-93. For three assessment years, viz., 1979-80
to 1981-82, there is a common appellate order, which is dated
12.08.2004. For A.Y.1992-93, there is separate appellate order
dated 04.08.2004. In all these appeals, however, exactly identical
issue is involved. Therefore, for the sake of convenience and
brevity, we are deciding them all by a common order.

2. The relevant facts are that the ld. CIT(A) set aside the
issue of depreciation on building, forming part of plant and
machinery, by giving a direction to Assessing Officer as per the
directions of the Hon'ble ITAT, to decide whether the buildings in
question are plant or not after proper appraisal of facts and
inspection of the buildings constructed, in view of the various
judgments discussed in the order. This order of the Tribunal is
dated 22.11.2001. Section 251(1)(a) came into effect from
01.06.2001, according to this amended provision, the power of the
ld. CIT (A) to set aside the assessment and refer the case back to
the Assessing Officer for making a fresh assessment in
accordance with his directions, has been withdrawn. In view of
these amended provisions the ld. ACIT, Circle-2, Udaipur filed
petition u/s 154 of the Act to rectify the order by calling the order
back. The ld. CIT(A), however, rejected the application so filed u/s
154, by observing that the specific directions given by him are in
consonance and in compliance with the direction of the Hon'ble
ITAT so his order was very well within the four-corners of law, and
these directions could not be considered as simple set aside of
the issues or that of the assessment order. This finding of the ld.
CIT (A), is the subject-matter of all these four appeals. The facts
and issues involved in all these appeals are, mutatis-mutandis,
identical.

3. We have heard the rival submissions and perused the

evidence available on record.

4. The department has raised similar plea as was raised

before the ld. CIT (A). The subject matter of all the above appeal
is exactly similar. Having gone through the orders of the CIT (A),
the applications u/s 154 so filed, the provisions of section 250 as
amended upto date and the ITAT order referred to in this regard,
we are of the considered opinion that the ld. CIT(A) has given his
direction in compliance of the order of Hon'ble ITAT. The ld. CIT
(A) is perfectly correct when he says that this set aside is not a
 D.B.Income Tax Appeal No.139/2007
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[ 14 ]

simplicitor set-aside as has been envisaged by the amended

provisions of section 251(1) (a) of the Act. We are totally in
agreement with the ld. CIT(A), who has done nothing more than
getting the order of the Tribunal implemented in its letters and
spirit. This is not a simple set aside, which is barred now.
Therefore, we confirm the finding of the ld. CIT(A), for all the four
years. The grounds taken in all these years, thus, have to fail.
This order was pronounced in the open Court, at the end of the
hearing.

4. In the result, all the appeals of the Revenue for

Assessment Years 1979-80 to 1981-82 and 1992-93, stand
dismissed.

We may observe that these three appeals arising out of the

aforesaid order of the ITAT, whereby the order passed by the CIT(A)

on 12.08.2004 in rejection of the rectification application was

affirmed (ITA Nos. 70/2008, 117/2008 and 142/2008), have been

admitted on the lines of the other three appeals and while

formulating similar nature substantial question of law with change of

date of filing of appeal as under:-

Whether the learned Commissioner had the power to send the

matter back to the Assessing Officer to decide the matter afresh
in view of the amendment made in Section 251 (1) (a) taking
away such power, which was made with effect from 1.6.2001,
while the appeal in the present case before the learned
Commissioner was filed on 29.4.2004?

There appears to be an obvious error in the question

abovementioned because none of the appeals in question was filed

before the CIT(A) on 29.04.2004 . In fact, this date i.e., 29.04.2004

has been date of the basic order passed by the CIT(A), as noticed

and discussed hereinbefore. Be that as it may, the core question as

to whether the CIT(A) was right in passing the order dated

29.04.2004 has already been answered against the revenue. As a

 D.B.Income Tax Appeal No.139/2007
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[ 15 ]

necessary consequence, it follows that the CIT(A) has rightly

rejected the rectification applications and the ITAT has rightly

dismissed the appeals relating thereto. Hence, these appeals also

deserve to be dismissed.

As a result of the discussion aforesaid, all these appeals fail

and are dismissed. No costs

(C.M.TOTLA), J. (DINESH MAHESHWARI), J.

mk