Calcutta High Court Allows Birla Corporation's Cross-Objections In Income Tax Appeal Under CPC

On 14 October, the Calcutta High Court allowed Birla Corporation Limited to maintain cross-objections in the Income Tax Department's appeal, subject to the requirement that they raise substantial questions of law.

A Division Bench comprising Justices Rajarshi Bharadwaj and Sudip Deb held that Section 260A(7) of the Income Tax Act, 1961, incorporates the relevant provisions of the Code of Civil Procedure, 1908 (CPC), including the right to file cross-objections. The judges observed:

“We are of the view that the insertion of the words in Section 260A(7) of the said Act ―… the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section." necessarily includes the right of filing cross objection. Such right need not be spelt out specifically.”

The Income Tax Department argued that the Income Tax Act does not expressly provide for cross-objections in appeals before the High Court, unlike appeals before the Income Tax Appellate Tribunal. It contended that the applicability of the CPC did not, by itself, confer the right to file cross-objections.

The Court rejected this argument, observing that Section 260A(7) makes the relevant CPC provisions applicable to income tax appeals before the High Court. The absence of an express provision in the Income Tax Act does not exclude the procedural right to file cross-objections.

It relied on the Supreme Court's decision in Bikram Singh v. Principal Commissioner of Income Tax, which recognised that an appeal before the High Court under the Income Tax Act is akin to a second appeal. It noted that the CPC provisions governing cross-objections can apply to such appeals.

Further, the Bench clarified that cross-objections cannot expand the High Court's appellate jurisdiction to questions of fact or matters that do not arise from the order of the Income Tax Appellate Tribunal. They must challenge an adverse part of the Tribunal's order and raise a substantial question of law. It said:

“..we are of the considered view that the right to file cross objection in an appeal filed under Section 260A of the said Act is maintainable...”

Accordingly, the High Court held that Birla Corporation's cross-objections were maintainable, subject to these limitations.

For Appellant: Prithu Dudhoria and Amit Sharma, Advocates 

For Income Tax Authority: Prithu Dudhoria and Anurag Roy, Advocates 

For Birla Corporation: J.P. Khaitan, Senior Advocate, Sanjoy Bhaumik and Swapna Das, Advocates