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Commissioner Of Income-Tax vs Renusagar Power Co. Ltd.

High Court Of Judicature at Allahabad|08 November, 1993

JUDGMENT / ORDER

JUDGMENT R.K. Gulati, J.
1. These are two connected applications under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), filed at the instance of the Commissioner of Income-tax, Allahabad. Income-tax Application No. 272 of 1991 is in respect of the assessment year 1968-69 in which the following three questions have been proposed :
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that in reassessment proceedings the Assessing Officer was not competent to consider those items in respect of which the hon'ble court on a writ petition under Article 226 of the Constitution of India had held that there was full and true disclosure ?
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right 'in not considering the principle laid down by the hon'ble Supreme Court in the case of CIT v. A, Raman and Co. [1968] 67 ITR 11, defining the scope of the hon'ble High Court's order on a writ petition challenging the reassessment proceedings ?
(3) Whether in the absence of any material on record the hon'ble Tribunal was correct in law in holding that expenditure of Rs. 1,93,581 incurred during the setting up of plant and machinery was revenue expenditure ?"
2. The other application, i.e., Income-tax Application No. 273 of 1991, is in respect of the assessment year 1969-70 in which the following two questions have been proposed :
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that in reassessment proceedings the Assessing Officer was not competent to consider those items in respect of which the hon'ble High Court on a writ petition under Article 226 of the Constitution of India had held that there was full and true disclosure ?
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in not considering the principle laid down by the hon'ble Supreme Court in the case of CIT v. A, Roman and Co. [1968] 67 ITR 11, defining the scope of the hon'ble High Court's order on a writ challenging the reassessment proceedings ?"
3. A common prayer in these applications is that the Income-tax Appellate Tribunal may be directed to refer the aforesaid questions for the opinion of this court. .
4. We have heard learned counsel for the parties.
5. We may take up question No. 3 first which concerns the assessment year 1968-69 only. The figure of Rs. 1,93,581 referred in the question is an aggregate amount of four items alleged to have been incurred in carrying on the business. The case of the Revenue was that the amount represented by the expenditure in question was inadmissible, for the expenditure was of capital nature, whereas the case of the assessee was that it was revenue expenditure and was liable to be allowed in computing the income chargeable to tax. The Income-tax Appellate Tribunal held in favour of the assessee. Whether a particular expenditure is of revenue nature or of capital nature is, in our opinion, a mixed question of law and fact and the question under consideration does arise from the order of the Income-tax Appellate Tribunal.
6. The other questions in respect of both the assessment years pertain to a common controversy which fell for consideration before the Income-tax Appellate Tribunal. The assessments for both the years were reopened under Section 147(a) of the Act as a result whereof notices under Section 148 of the Act for these years were issued. These notices were challenged by the assessee before this court by means of two separate writ petitions. Both the petitions were allowed in part. This court took the view that in respect of some items the action for reassessment was bad as it was based on a change of opinion, while in respect of others, the notices Were valid and the Department was permitted to continue the reassessment proceedings in respect of which the notices were held valid. During the course of assessment proceedings, the Income-tax Officer came across certain other items of income which were not the subject-matter of the petition, which, in his opinion, had also escaped assessment. He brought to tax those items as well in completing the reassessment. The Income-tax Appellate Tribunal has deleted those additions on the reasoning that on the true import of the order passed in the writ petition by this court, the Income-tax Officer was debarred from bringing to tax any other items of income except those in respect of which notices under Section 148 were held valid by this court. Whether the decision of the Income-tax Appellate Tribunal is liable to be sustained or not, would depend upon the construction of the order passed by this court in the two writ petitions. Where the true intent and import of an order depends upon its construction, in our opinion, it gives rise to a question of law. Therefore, the questions concerning the reassessment proceedings proposed for the two years in dispute do arise out of the order of the Income-tax Appellate Tribunal.
7. In view of what has been indicated above, in our opinion, these two applications are liable to succeed. Accordingly, we direct the Income-tax Appellate Tribunal to draw up a statement of the case and refer the aforesaid questions for the opinion of this court. The Revenue shall be entitled to its costs which we assess at a consolidated figure of Rs. 300.
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Title

Commissioner Of Income-Tax vs Renusagar Power Co. Ltd.

Court

High Court Of Judicature at Allahabad

JudgmentDate
08 November, 1993
Judges
  • R Gulati
  • S Verma