1997 PLP 442 (PTD)

DR. B.P. SARAF, J.--By this reference made under section 256(1) of the Income-tax Act ("the Act"), the following question of law has been referred to this Court for opinion that instance of the Revenue: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the action of the Income -tax Officer under section 197(3) of the Income Tax Act, 1961, is appealable in terms of the provisions of section 248?" The controversy in this case is in a very narrow compass. The assessee is a limited company. The assessment year involved is 1978-79. The assessee had declared dividend to the tune of Rs.64,80,000 and its claim for relief under section 80-J amounted to Rs.23,28,

917. The assessee made an application to the Income-Tax Officer under subsection (3) of section 197 of the Act to determine the proportion of the dividend to be deducted under the provisions of section 80-K as 35.94 per cent of the dividend. The Income- tax Officer, however, by certificate issued under section 197(3) of the Act restricted the same to 20 per cent as in his opinion 20 per cent. of the dividend alone could be deemed to be representing profits exempt under the provisions of section 80-J of the Act. It was observed by the Income-tax Officer in the above certificate that it was issued provisionally and was subject to change on final determination at the time of regular assessment. The assessee field an appeal before the Commissioner of Income-tax (Appeals) against the above certificate issued by the Income-tax Officer under section 197(3) of the Act. The Commissioner of Income-tax (Appeals) declined to entertain the appeal on the ground that no appeal was provided under section 246 or 248 of the Act against an order of the Income-tax Officer under section 197(3) of the Act. The Commissioner (Appeals) also observed that the certificate being provisional in nature, the assessee could not have any grievance at that stage because the provisional certificate was subject to change on final determination at the time of regular assessment. The assessee appealed against the above order of the Commissioner (Appeals) to the Income-tax Appellate Tribunal ("the Tribunal"). The Tribunal held that the order of the Income Tax Officer under section 197(3) of the Act was appealable. The Tribunal, therefore, restored the appeal and remitted it to the Commissioner of Income-tax (Appeals) for adjudication on the merits. The Revenue, not being satisfied with the construction put by the Tribunal on section 248 of the Act, sought for reference under section 256(1) of the Act, and, accordingly, the Tribunal has referred the question set out above to this Court for opinion. It is well-settled by now that the right of appeal is not an inherent right. It cannot be claimed as a matter of right. It is a statutory right. It is open to the Legislature to give or not to give a right of appeal against decisions made by the authorities under the Act. No appeal would, therefore, lie unless it is provided by the statute. If is, therefore, necessary to peruse the statutory provision conferring the right of appeal. There is no dispute in this case that section 246 of the Act does not provide for any appeal against an order under section 197(3) of the Act. The only provision on which reliance is placed by the assessee and the Tribunal is section 248 of the Act which reads as follows: "

248. Appeal by person denying liability to deduct tax.--Any person having in accordance with the provisions of sections 195 and 200 deducted and paid tax in respect of any sum chargeable under this Act, other than interest, who denies his liability to make such deduction, may appeal to the Appellate Assistant Commissioner to be declared not liable to make such deduction. " Section 248 thus confers the right of appeal on appeal on persons denying their liability to deduct tax in accordance with the provisions of section 195 and section 200 of the Act. It does not confer any right of appeal on a company or its principal officer against an order passed by the Income- tax Officer under section 197(3) of the Act. Section 197(3) merely confers on the principal officer of the company in certain cases a right to make an application to the Income-tax Officer to determine the appropriate proportion of the dividend to be deducted under the provisions of section 80-K and a duty on the Income Tax Officer to make the determination. No appeal is provided under section 248 or any other provisions of the Act against the determination made by the Income-tax Officer under section 197(3) of the Act. No appeal shall, therefore, lie against such order. In the premises, in our opinion, the Tribunal was not right in law in holding that the action of the Income-tax Officer under section 197(3) of the Income-tax Act is appealable in. terms of the provisions of section 248 of the Act. We, therefore, answer the question referred to us in the negative and in favour of the Revenue. Under the facts and circumstances of the case, there shall be no order as to costs. M.B.A./1110/FC Order accordingly.