ITAT to apply decision of larger bench in case of conflicting decisions of non-jurisdictional HCs: ITAT

Case Details: Wockhardt Ltd. v. DCIT - [2022] 144 taxmann.com 27 (Mumbai - Trib.)

Judiciary and Counsel Details

• • Pramod Kumar, Vice-President & Sandeep S Karhail, Judicial Member
  • Ronak Doshi & Jinal Jain for the Appellant.
  • Vatsala Jha for the Respondent.

Facts of the Case

The issue before the Mumbai Tribunal was in what manner and to what extent the decisions of Hon’ble non-jurisdictional High Courts bind the lower judicial forums outside of their jurisdiction.

ITAT Held

The Mumbai Tribunal held when there are conflicting decisions of non-jurisdictional High Courts but no decision of jurisdictional HC on an issue, ITAT should not as a rule apply the view favorable to the assessee.

It’s a conscious call that is required to be taken for the question of whether, on the facts of a particular situation, the non-jurisdictional High Court is required to be followed.

For Tribunal, it is a compulsion by law to follow a jurisdictional High Court decision. However, following a non-jurisdictional High Court is a call of judicial propriety. The decisions of the non-jurisdictional High Court are followed in letter and spirit if there is no contrary decision by the jurisdictional High Court.

Difficulties arise when there are conflicting views of the non-jurisdictional High Courts. Tribunal can’t choose the views of one of the High Courts based on its perceptions.

In the given case, there was one decision of the division bench consisting of two Hon’ble judges, and there was another decision of a single judge bench consisting of only one Hon’ble judge.

The Tribunal has much simpler and much more objective criteria readily available, which is the strength of the bench of the Hon’ble non-jurisdictional High Court which has rendered the judgment.

The plurality in the decision-making process makes the decisions of benches with a larger number of Hon’ble judges being placed on a higher pedestal than the decisions of the benches with a lesser number of Hon’ble judges.

Between a division bench decision of a non-jurisdictional High Court and a single judge bench of a non-jurisdictional High Court, a simple objective criterion of choice is the division bench decision to be preferred over the single judge bench decision.