In Gee City Builders Private Limited v. CIT, the Punjab and Haryana High Court held that when the income of the assessee was assessed by the Assessing Officer at `12,74,720/- but was computed under the MAT provisions exceeding the monetary limit of 50,00,000/=, the matter must be heard by division of the Tribunal.
While directing the Tribunal to hear the petitioners matter by constituting a division bench, the Court held that the legislature has used the term “computed” in contra-distinction to the word “assessed” in section 255(3) of the Income Tax Act.
Assessee-Company was engaged in the business of development of housing project units. For the relevant assessment year, AO allowed deduction under Section 80IB(10) to the assessee for income received by them in respect of sale of its flats. While doing so, the AO held that the assessee is liable to pay tax under MAT provisions. The claim of the assessee that the provisions of Section 115JB of the Income Tax Act were not applicable to them, was also rejected.
Assessee failed to secure relief from the first and second appellate authorities, and therefore, approached the High Court.
Before the High Court, the assessee urged that the appeal was heard by the Single Member of the Tribunal whereas according to Section 255(3) of the Act, it ought to have been heard by a two-member bench since the income computed by the Assessing Officer under MAT was more than ` 50,00,000/-.
On behalf of the department it was contended that the income assessed was less than `15,00,000/- and, therefore, hearing of the appeal by learned Single Member of the Tribunal was justified.
Analyzing the provisions of section 255 of Income Tax Act, the division bench comprising of Justice Ajay Kumar Mittal and Justice Ramendra Jain said that as per Section 255(2) read with sub section (3), the Bench shall be constituted with one judicial member and one Accountant member. Under sub-section (3) of Section 255 of the Act, the President or any other member of the appellate Tribunal is authorized to adjudicate appeals sitting singly which have been allotted to the Bench pertaining to an assessee whose total income as computed by the Assessing Officer does not exceed the specified limit.
Considering the wordings of the provision and the legislative history of monetory limit u/s 255(3), the bench allowed the appeal and observed that “the legislature has used the term ‘computed’ in contra-distinction to the word ‘assessed’ in sub section (3) of Section 255 of the Act. In the present case, the income of the assessee was assessed by the Assessing Officer at ` 12,74,720/- but was computed under the MAT provisions at ` 96,28,336/- under Section 115JB of the Act which was much above the limit prescribed under sub-Section (3) of Section 255 of the Act. The appeal was decided on 01.06.2016 on which date, the limit for hearing appeal by learned Single Member of the Tribunal would be taken at ` 50,00,000/- as the amended provision of sub section (3) of Section 255 of the Act by Finance Act 2016 was made operative from 1.6.2016 itself.”
Read the full text of the Judgment below.
