ORDER
S.N. Rotho, Accountant Member
1. This appeal has been filed by the assessee against the order dated 2-3-1983 of the Commissioner (Appeals) relating to the assessment year 1979-80.
2. At the outset, we may state that the second ground taken in this appeal was not pressed before us at the time of hearing and so we find the same against the assessee.
3. That leaves only one ground for our consideration. This ground states that the assessing officer erred in not granting relief under Section 80K of the Income-tax Act, 1961 (‘the Act’) on the entire dividend of Rs. 4,49,573 received by the assessee from IMFA Ltd. The assessee is an individual. In course of assessment proceedings, he claimed relief under Section 80K on the entire dividend received by him from IMFA Ltd. The assessing officer found that the new industrial undertaking had no profit during the relevant assessment year and so the relief admissible to the company had been carried forward under Section 80J(3) of the Act. Relying on the decision in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. v. A.V. Joshi, ITO [1979] 118 ITR 544 (Guj.), the assessing officer did not allow any relief under Section 80K on the ground that no deduction under Section 80J was actually allowed in the case of the company declaring the dividend.
4. The assessee appealed to the Commissioner (Appeals) and contended that the assessing officer erred in his decision. Reliance was placed on the decision of the Supreme Court in the case of Union of India v. Coromandel Fertilizers Ltd. [1976] 102 ITR 533. It was urged that in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd.’s case (supra), the decision of the Supreme Court in the case of Coromandel Fertilisers Ltd. (supra) has been ignored in preference to another decision of the Supreme Court in the case of CIT v. S.S. Sivan Pillai [1970] 77 ITR 354. It was further urged that the decision in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra) given by the Gujarat High Court was not correct and should not be followed. The Commissioner (Appeals) considered the contentions of the assessee but did not agree with the same. He quoted the relevant portions of the decision in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd, (supra) wherein the Gujarat High Court has considered all the Supreme Court decisions including those given before and after the decision in the case of Coromandel Fertilizers Ltd. (supra). He held that the Gujarat High Court has fully considered the Supreme Court decision in the case of Coromandel Fertilizers Ltd. (supra) and yet came to the conclusion on the basis of the subsequent Supreme Court decision in the case of CIT v. Patiala Flour Mills Co. (P.) Ltd. [1978] 115 ITR 640 and Union of India v. K.S. Subramanian AIR 1976 SC 2433 that the relief under Section 80K allowable in the hands of the shareholder should be limited to the amount of relief given under Section 80J to the company declaring the dividend. In this view of the matter, he rejected the claim of the assessee.
5. Another ground was taken before the Commissioner (Appeals) by the assessee, viz., that the assessing officer of the company declaring the dividend had issued a certificate under Section 197(3) of the Act to the effect that the entire amount of dividend proposed to be declared by the company would be exempt in the hands of the shareholder under Section 80K. In view of the above certificate given by the said officer, it was urged that the company did not deduct any tax while distributing dividend to the shareholders. Consequently, it was urged that the department could not later turn round and say that the entire dividend is not exempt under Section 80K for some reason or other. The Commissioner (Appeals) considered this contention but rejected the same on the ground that a certificate under Section 197(3) did not operate as a bar against the department to ascertain the correct percentage of dividend qualifying for relief under Section 80K while doing the assessments of the shareholders. In this view of the matter, the Commissioner (Appeals) upheld the decision of the assessing officer and rejected the contention of the assessee on the point under consideration.
6. Shri B.K. Mohanty, the learned representative for the assessee, urged before us more or less, the same grounds that were advanced before the Commissioner (Appeals) as enumerated above. He strongly contended that the decision of the Gujarat High Court in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra) was incorrect and should not be followed by us. According to him, we should follow the decision of the Supreme Court in the case of Coromandel Fertilizers Ltd. (supra) without reading the decision in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra). In other words, he urged us to ignore the decision of the Gujarat High Court in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra) and read the decision in the case of Coromandel Fertilizers Ltd. (supra) and apply the said ratio to the facts of this case. In this connection, he took us through the legislative history of the sections beginning from Section 15C of the Indian Income-tax Act, 1922 and then proceeded to Sections 80K, 84 and 85 of the 1961 Act. In this connection, he also took us through the provisions of Section 80J(3) as well as circular No. 5P, dated 9-10-1967 issued by the CBDT, published in Sampat lyenger’s Law of Income-tax, Seventh edn., Vol. 3, p. 2778. According to him, a careful consideration of the provisions of law as enumerated above, would lead to the irresistible conclusion that the decision of the Gujarat High Court in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra) was not correct and so should not be followed by us. He also referred to the decision of the Supreme Court in the case of Union of India v. Godfrey Philips India Ltd. 1985 ECR 1989 for the proposition that the department cannot change its position after having let the assessee to believe that the dividend in the hands of the shareholder would be exempt under Section 80K by virtue of the certificate under Section 197(3) issued by the assessing officer assessing the company declaring the dividend.
7. Shri B. Mishra, the learned representative for the department, on the other hand, supported the order of the Commissioner (Appeals). He took us through the decision in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra) and pointed out that the arguments now raised before us were also raised before the Gujarat High Court and the decision therein has been given after considering all the aspects of the matter. Regarding the argument based upon the certificate issued under Section 197(3), he stated that it was merely a provisional certificate for facility of collecting tax by way of deduction at source and so it could not be taken as binding on the assessing officer doing the regular assessment of the shareholders. In this connection, he filed a copy of the certificate dated 9-6-1977 issued by the assessing officer which clearly states at the end : ‘the certificate is issued provisionally as the final assessment has not yet been completed’.
8. We have carefully considered the contentions of both the parties as well as the facts on record. The issue raised before us is as to whether a shareholder is entitled to relief under Section 80K in respect of the dividends received by him even though the company declaring the dividends could not get any deduction under Section 80J because of lack of profits in the new industrial undertaking in the relevant previous year. This very issue has been considered in detail by their Lordships of the Gujarat High Court in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra). Arguments similar to those taken by the assessee before us were also advanced in that case. At p. 562, it has been stated “Mr. Kaji for the petitioner said that Section 80K having been interpreted by the Supreme Court in Coromandel Fertilizers’ case [1976] 102 ITR 533, that interpretation is binding on us and, therefore, we should allow the petition in the light of that decision.” In spite of the said pleading, the High Court pointed out that there have been subsequent decisions of the Supreme Court and other overriding considerations for which the decision in the case of Coromandel Fertilizers Ltd. (supra) could not be followed. At p. 572, the High Court concluded, thus : “Under the scheme of Section 80J as explained by the Supreme Court by the Bench of three Judges in Patlala Flour Mills Co.’s case [1978] 115 ITR 640, the entitlement is available under Section 80J(1) only if there are assessable profits and gains and not otherwise. The same meaning must be reflected in the provisions of Section 80K and it is because of this decision in Patlala Flour Mills Co.’s case [1978J 115 ITR 640 (SC), which is a decision of three judges and in the light of the decision of the Supreme Court in K.S. Subramaniari’s case AIR 1976 SC 2433, that we are deciding this case and taking the view that we do.” In view of the above clear and categorical exposition of the law of the Hon’ble Gujarat High Court, there is no room for coming to any conclusion other than the one arrived at therein. We are not aware of any decision of any other High Court holding a contrary view, nor has the assessee pointed out any such case to persuade us to differ from the view expressed in Ahmedabad Mfg. & Calico Printing Co. Ltd.’s case (supra). In the case of CTT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bom.), it has been held by the Bombay High Court that the Tribunal, acting anywhere in the country, has to respect the law laid down by the High Court though of a different State so long as there is no contrary decision of any other High Court on that question. Hence, we agree with the revenue authorities that the decision in the case of Ahmedabad Mfg. & Calico Printing Co. Ltd. (supra) which has considered all the decisions of the Supreme Court on the subject has to be respectfully followed.
9. Coming to the argument based on the certificate given under Section 197(3) , we find that the said certificate was provisionally given in order to facilitate early collection of tax and the same is not binding either on the assessee or on the department vis-a-vis the assessment of the recipient-shareholder. That certificate authorises or obliges only the dividend-declaring company and has no bearing on the assessment of the shareholder. This is clear from the scheme of the Act. Otherwise, there was no necessity for the shareholder to declare the dividend in the return filed by him and claim a refund or pay the additional tax, as the case may be, as required under the law. Hence, we do not see any force in this argument.
10. For the above reasons, we uphold the order of the Commissioner (Appeals) and reject the ground taken by the assessee before us. However, we make it clear that the relief under Section 80K is admissible in the hands of the assessee to the extent, and only to the extent of the actual deduction of Section 80J relief determined in the assessment of the dividend-declaring company, calculated proportionately.
11. At the time of hearing, an additional ground was sought to be raised before us. We find that the petition does not spell out the actual additional ground. In any case, it appears to be concerning with the quantum of relief under Section 80K. The admission of this additional ground would involve investigation into fresh facts. Besides, no satisfactory reason was given before us as to why this ground was not taken at the time of filing the original memorandum of appeal. Hence, we decline to admit this additional ground at this late stage.
12. In the result, the appeal is dismissed.
