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8 Appeal — Appeals of Revenue cannot be
entertained if it has accepted and not challenged the ruling of the High Court
passed on the issue.
[ ACIT v. Surat City Gymkhana, (2008) 300 ITR 214
(SC)]
The respondent-assessee claimed exemption u/s. 10(23) of the
Income-tax Act, 1961, for the A.Ys. 1991-92 and 1992-93. The said exemption was
claimed on the basis that the objects of the respondent-assessee were
exclusively charitable. The Assessing Officer rejected the claim. The appeals
filed before the Commissioner of Income-tax (Appeals) were dismissed. Aggrieved
thereby, the assessee filed further appeals before the Tribunal. The Tribunal,
by its order dated January 20, 2000, allowed the
appeals filed by the respondent-assessee. The Revenue filed appeals before the
High Court of Gujarat. The Revenue claimed that the following two substantial
questions of law arise from the order of the Tribunal :
(A) Whether, on the facts and circumstances of the case,
the Income-tax Appellate Tribunal was justified in law in holding that the
objects of the trust restricting benefits to the members of the club would
fall within the purview of the act of ‘general public utility’ u/s.2(15) of
the Income-tax Act constituting as a section of public and not a body of
individuals ?
(B) Whether, on the facts and circumstances of the case,
the Income-tax Appellate Tribunal was justified in law in holding that
registration u/s.12A was a fait accompli to hold the AO back from
further probe into the objects of the trust ?
The High Court dismissed the appeals, in limine,
relying on a decision of the same Court in the case of Hiralal Bhagwati v.
CIT, (2000) 246 ITR 188; (2000) 161 CTR 401. Being dissatisfied by the order
of the High Court, the Revenue has filed these appeals. The Supreme Court, on
July 22, 2002, granted leave in respect of question No. ‘B’ only. The appeals
were not entertained in respect of the question No. ‘A’ and it was noted that
the appeals were rightly dismissed by the High Court insofar as question No. ‘A’
is concerned, as the appellant did not challenge the correctness of the judgment
in the case of Hiralal Bhagwati (supra). At the hearing the Supreme Court
found that on a perusal of the judgment of the Gujarat High Court in the case of
Hiralal Bhagwati (supra), question No. ‘B’ was also concluded by the said
judgment (for 1st para of page 196). Further, since the Revenue had not
challenged the decision in the said case, the same has attained finality. The
Supreme Court held that question No. ‘B’, therefore, should also meet the same
fate as question No. ‘A’, as this Court had declined to grant leave in respect
of question No. ‘A’ on the ground that the Revenue did not challenge correctness
of the decision in the case of Hiralal Bhagwati (supra). It appeared that
the fact that question No. ‘B’ was also covered by the aforementioned judgment,
was not brought to the notice of their Lordships and, therefore, leave granted
was restricted to question No. ‘B’. In this view of the matter, the appeals were
dismissed.
