OF THE COURT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J The appeal is filed by the revenue against the order of the Income Tax Appellate Tribunal, 'B' Bench, Chennai dated 24.6.2003 made in ITA.Nos.2234 /Mds/95. The relevant assessment year is 1992-93. 2. The facts as culled out from the statement of facts stated in the memorandum of appeals are as follows:-
The assessee is engaged in the business of bus transport. For the assessment year 1992-93, the assessee inter alia claimed deduction on account of exgratia amount paid in excess over the provision, contribution to the Institute of Road Transport and reimbursement towards student concessional passes. The assessing officer disallowed part of the ex-gratia amount being the difference between the exgratia amount actually paid to the workers and the amount shown in the memo of taxable income and made an addition of Rs.12.88 lakhs. The assessing officer also disallowed the contributions to the Institute of Road Transport which had been made after the end of the relevant accounting year. The assessing officer made an addition on account of the reimbursement due from the Government towards provision of free and concessional student passes, although the assessee had not included the same in the total income as it had not been received during the year.
3. Aggrieved by the said order, the assessee carried the matter on appeal to the Commissioner of Income Tax (Appeals), who allowed the appeal and deleted the addition with regard to contributions to Institute of Road Transport on the ground that although payments have been made after end of the accounting year, the payments were made before filing of returns and the additions on account of reimbursement of free/concessional student passes. However, the Commissioner of Income Tax (Appeals) dismissed the appeall regarding the issue of ex-gratia amount claimed in excess.
4. As against the said order, the assessee and the Revenue both went on appeal to the Income Tax Appellate Tribunal. The Tribunal held that since the assessee had disbursed the additional ex-gratia amount during the assessment year, although it was after the end of the relevant assessment year, they are entitled to the deduction. Regarding the issue of contribution to the Institute of Road Transport, the Tribunal held that the contribution fell under
Section 35(i)(ii) and that "paid" should be read as "payable" and as the assessee was following the mercantile system of accounting the fact that the actual payment was made beyond the accounting year has no relevance. Regarding reimbursement claims for free/concession student passes, the Tribunal held that since reimbursement was an uncertainty, the transport companies had decided to account for this alone on a cash basis, although otherwise following a mercantile system. Accordingly, the Tribunal held that this amount could not be added.
5. Aggrieved by the order of Income Tax Appellate Tribunal, the present tax case appeal is filed by formulating the following substantial questions of law:-
1. Whether in the facts and circumstances of the case, the Tribunal was right in allowing deduction of ex-gratia payment made after the end of the accounting year contrary to the provisions of
Section 43B of the Income Tax Act ?
2. Whether in the facts and circumstances of the case, the Tribunal was right in allowing deduction in respect of contributions to Institute of Road Transport that were not actually paid during the relevant previous year ?
3. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to accounting reimbursement claims in respect of student concession passes on a cash basis , while it was generally following a mercantile system of accounting ?
6. We heard the arguments of the learned counsel for the appellant and perused the materials available on record.
7. The Revenue before filing an appeal against the assessee, the State owned Corporation, has to obtain clearance from the Committee of Disputes (CoD). The apex Court, in the case of ONGC v. City and Industrial Development Corporation, Maharashtra Ltd., (2007) 7 SCC 39, after referring to the earlier cases in ONGC (I) v. CCE, 1992 Supp (2) SCC 432; ONGC (II) v. CCE, 1995 Supp (4) SCC 541; ONGC (III) v. CCE, (2004) 6 SCC 437; in which directions have been issued to set up governmental committee to resolve the dispute between the intra-governmental or intergovernmental disputes involving Government Departments or Government owned companies of the Central and State Governments, rather than adjudicating the same before Courts of law, and having regard to the fact of the particular case, that the matter was pending since 1990 and considering the nature of the controversy, which is a recurring feature, directed that a Committee be formed to sort out the differences between the Central Government and the State Government entities. The composition of such committee is also stated to be as follows :
1. The Cabinet Secretary of the Union;
2. Chief Secretary of the State;
3. Secretaries of the departments concerned of the Union and the States; and
4. Chief Executive Officers of the undertakings concerned.
8. The Supreme Court in the case of Chief Conservator of Forests, Govt. Of A.P. vs. Collector and Others reported in (2003)3 Supreme Court Cases 472 has held as follows:-
"Disputes between Government Departments cannot be contested in Court. States/Union of India must evolve a mechanism for resolving interdepartmental controversies. Constitution of Committees suggested which should consist of Chief Secretary, Secretaries of the departments concerned, Secretary of Law and Secretary of Finance (where financial commitments are involved) whose decision should be binding on all departments concerned".
9. The apex Court also held that it shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with. The same has been reiterated in the latest decision of the Supreme Court in the case of CIT, Delhi VI v. M/s. Oriental Insurance Co. Ltd., in Civil Appeals Nos.4529 of 2008 etc., decided on July 18, 2008.
10. In order to discharge that obligation, when we posed a question to the learned counsel as to whether such a clearance has been obtained from the CoD, he admitted that such a certificate from COD has not been obtained. Hence, the appeal is dismissed as not entertainable in the absence of the clearance, however, by giving liberty to the appellant to move this Court after obtaining clearance from CoD.
krr/ To
1. M/s. Pandian Roadways Corpn. Ltd., Madurai.
2. The Income Tax Appellate Tribunal, Chennai 'C' Bench, Chennai